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1. Penalty proceedings under section 28(1)(a) post reassessment 2. Interpretation of section 28(1)(a) regarding penalty levy Analysis: The judgment by the High Court of Calcutta dealt with a reference under section 66(1) of the Indian Income-tax Act, 1922, concerning penalty proceedings under section 28(1)(a) for the assessment year 1959-60. The primary issue was whether penalty proceedings initiated for non-submission of return in the original assessment could be completed after a reassessment was made. The court examined the timeline of events, including notices served, assessment, appeals, and reassessment. The Income-tax Officer levied a penalty after the reassessment, leading to a dispute regarding the timing of penalty imposition in relation to assessment proceedings. The court considered the interplay between penalty proceedings and assessment proceedings under the Income-tax Act. The assessee argued that penalty should have been imposed simultaneously with the original assessment and not post reassessment. However, the court held that penalty proceedings are distinct from assessment proceedings, with separate provisions for imposition of penalties. It noted that penalty imposition requires quantification of tax payable, which necessitates completion of assessment proceedings before penalty can be levied. Regarding the interpretation of section 28(1)(a), the court addressed the issue of whether the penalty amount should be based on the original assessment or the reassessment. It concluded that the penalty amount should be determined based on the sum payable at the time of penalty imposition, which could be the amount from the original assessment or the reassessment. The court cited relevant Supreme Court decisions and High Court judgments to support its interpretation of the law in this regard. Furthermore, the court rejected the argument that no sum was payable post reassessment, emphasizing that the reduced amount determined in an appeal becomes the payable sum. It clarified that in the case at hand, the sum payable was based on the new reassessment proceeding, rendering the argument of no sum payable invalid. The judgment highlighted the importance of distinguishing between penalty imposition and assessment proceedings, ensuring that penalties are imposed in accordance with the provisions of the Income-tax Act. In conclusion, the High Court of Calcutta provided a detailed analysis of the issues surrounding penalty proceedings under section 28(1)(a) in the context of reassessment, emphasizing the independence of penalty proceedings from assessment proceedings and the criteria for determining penalty amounts based on the sum payable at the time of penalty imposition.
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