- (1.)THE assessment years in question are 1985-86, 1986-87 and 1987-88, It is not in dispute that the assessments had in fact been completed under section 143(3) of the Income Tax Act, 1961. Subsequently, re-assessment proceedings were completed under section 147. The revenue sought to impose penalty under section 273(2)(aa) on the assessee in respect of the order passed under section 147.
(2.)THE contention of the assessee was that in view of the decision of this court in Modi Industries Ltd. v. : [1995] 216 ITR 759(SC) , the penalty proceedings under section 273 would not lie in respect of an assessment under section 147 and that the phrase regular assessment used in section 273 referred to the original assessment made under section 143(3).
(3.)THE Tribunal upheld the submission of the assessee. A reference was made under section 256(2) before the High Court on the following question : Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that penalty under section 273(2)(ad) cannot be levied as it has been initiated in the re -assessment proceedings ?;
The High Court rejected the reference application on the ground that the issue was squarely covered by the decision in Modi Industries Ltd.s case (supra).