P. N. BHAGWATI, J. ( 1 ) THIS Reference raises a short but interesting question of law relating to the Construction of secs. 271 (1) and 297 (2) (g) of the Income-tax Act 1961 (hereinafter referred to as the new Act ). The assessee who is assessed in the statuts of an individual returned a total income of Rs. 8 383 for the assessment year 1960-61 the relevant account year being Samvat Year 2015. The return was admittedly filed by the assessee before 1st April 1962 being the date of commencement of the new Act. The income-tax Officer did not accept the figure of total income returned by the assessee and determined the total income to be Rs. 33 307 by an assessment order made on 24th November 1952 after the commencement of the new Act. The Income-tax Officer was satisfied in the Course of the assessment proceeding that the assessee had concealed particulars of his income or deliberately furnished inaccurate particulars of such income and he therefore made a note to the following effect at the end of the assessment order:issue show cause notice for concealing the particulars of income or deliberately furnishing inaccurate particulars of such income. A notice was then issued by the Income-tax Officer to the assessee under sec. 274 (1) read with sec. 271 (1) (c) of the new Act calling upon him to show cause why penalty should not be levied upon him. The assessee filed his reply and on considering the reply the Income-tax Officer was of the opinion that the minimum penalty liable to be imposed on the assessee was much more than Rs. 1 0 and he therefore referred the matter to the inspecting Assistant Commissioner under sec. 274 (2 ). The Inspecting Assistant Commissioner issued another notice dated 15th February 1963 calling upon the assessee to show cause why penalty should not be imposed on him and after considering the objections filed by the assessee he imposed a penalty of Rs. 7 500 under sec. 271 (1) (c) read with sec. 274 (2 ). The assessee appealed to the Tribunal and two contentions were urged by him in support of the appeal. One was that sec. 271 (1) (c) under which the penalty was imposed was not at all applicable to the present case and the other was that on merits the penalty was improperly levied. 274 (2 ). The assessee appealed to the Tribunal and two contentions were urged by him in support of the appeal. One was that sec. 271 (1) (c) under which the penalty was imposed was not at all applicable to the present case and the other was that on merits the penalty was improperly levied. The Tribunal took the view that since the assessment proceeding in the course of which the Income-tax officer was satisfied that there was concealment on the part of the assessee was admittedly a proceeding under the Income tax Act 1922 (hereinafter referred to as the old Act) and not under the new Act sec. 271 (1) (c) had no application and the order of penalty was bad. This view taken by the Tribunal is challenged on the present Reference. ( 2 ) NOW the order of penalty was made by the inspecting Assistant Commissioner under sec. 274 (2) read with sec. 271 (1) (c) of the new Act and it is therefore clear that unless sec. 271 (1) (c) applies in the present case the order of penalty cannot be sustained. The order of penalty cannot be justified under sec. 28 (1) of the old Act since under that provision no penalty could be imposed by an Inspecting Assistant Commissioner and consequently the validity of the order of penalty must depend ultimately on the applicability of sec. 271 (1) (c ). Could on the facts and circumstances of the case penalty be imposed on the assessee under sec. 271 (1) (c)? The question calls for an examination of the relevant provisions of the new Act. ( 3 ) THE new Act came into force on 1st April 1962. Prior to the coming into force of the new Act sec. 28 (1) of the old Act provided for imposition of penalty and that section omitting portions immaterial was in the following terms:-28 (1) If the Income-tax Officer the Appellate Assistant Commissioner or the Appellate Tribunal in the course of any proceedings under this Act is satisfied that any person (a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish by notice given under sub-sec. (1) or sub- sec. (2) of sec. 22 or sec. (1) or sub- sec. (2) of sec. 22 or sec. 34 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by such notice or (b) has without reasonable cause failed to comply with a notice under sub-sec. (4) of sec. 22 or sub-sec. (2) of sec. 23 or (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income he or it may direct that such person shall pay by way of penalty in the case referred to in clause (a) in addition to the amount of the income-tax and super-tax if any payable by him a sum not exceeding one and a half times that amount and in the cases referred to in clauses (b) and (c) in addition to any tax payable by him a sum not exceeding one a half times the amount of the income-tax and super-tax if any which would have been avoided if the income as returned by such person had been accepted as the correct income. xx xx xx xx xx xx xx xx xx. On the coming into force of the new Act the old Act was repealed by sec. 297 (1) of the new Act but certain saving provisions were enacted in sec. 297 (2 ). Cases were bound to arise where at the date of coming into force of the new Act assessments for the assessment year ending 31st March 1962 and earlier assessment years might not have been completed: in some cases the returns might have been filed and in some others even the returns might have remained to be filed. These assessments being for the assessment year ending 31st March 1962 and earlier assessment years the new Act of its own force would not apply to them and the old Act being repealed would also cease to apply from 1st April 1962. Some provision was therefore necessary in regard to these cases and such provision was made in sec. 297 (2) clauses (a) and (b):- (2 ). Some provision was therefore necessary in regard to these cases and such provision was made in sec. 297 (2) clauses (a) and (b):- (2 ). Notwithstanding the repeal of the Indian Income-tax Act 1922 (hereinafter referred to as the repealed Act)- (a) where a return of income has been filed before the commencement of this Act by any person for any assessment year proceedings for the assessment of that person for that year may be taken and continued as if this Act bad not been passed; (b) where a return of income is filed after the commencement of this Act otherwise than in pursuance of a notice under sec. 34 of the repealed Act by any person for the assessment year ending on the 31st day of March 1962 or any earlier year the assessment of that person for that year shall be made in accordance with the procedure specified in this Act;xxx xxx xxx xxx xxx xxx xxx xxx xxx. In the present case the return was admittedly filed by the assessee prior to 1st April 1962 and the case was therefore governed by sec. 297 (2) (a) and under that section proceedings for the assessment of the assessee could be taken and continued as if the new Act had not been passed. The scope and ambit of the expression assessment in sec. 297 (2) (a) came to be considered by the Supreme Court in the recent unreported decision in Civil Appeal No. 1421 of 1966 Kalawati Devi Harlalka v. Commissioner of Income-tax West Bengal and in that case the Supreme Court after referring to the decision of the Privy Council in Commissioner of Income-tax Bombay v. Khemchand Ramdal (1938) 6 I. T. R 414 and its decisions in A. N. Lakshman Sheppy v. Income-tax Officer Ernakulam (1958) 34 I. T. R. 275 C. A Abraham v. Income-tax Officer (1961) 41 I. T. R. 425 and Commissioner of income-tax v. Patiala Cement Co. Ltd. (1952) 32 I. T. R. 383 held that the word assessment in sec. 297 (2) (a) was used in a comprehensive sense so as to include the whole procedure for ascertaining and imposing liability upon the tax-payer. Now as held in C. A. Abraham v. Income-tax Officer (supra) penalty is imposed as a part of the machinery for assessment of tax liability and the process of assessment includes taking steps for imposition of penalty. Now as held in C. A. Abraham v. Income-tax Officer (supra) penalty is imposed as a part of the machinery for assessment of tax liability and the process of assessment includes taking steps for imposition of penalty. The proceedings for assessment within the meaning of sec. 297 (2) (a) would therefore plainly include imposition of penalty and if in the course of the assessment proceeding the Income-tax Officer was satisfied that the assessee had committed any of the defaults enumerated in clauses (a) (b) and (c) of sec. 28 (1) penalty could be imposed on the assessee under that section by reason of sec. 297 (2) (a ). This would appear to be clear on principle and no authority is necessary in support of it but if any authority were needed with a view to fortifying the concousion it may be found in the decision of the Mysore High Court in S. C. Magavi Haveri v. Commissioner of Income-tax (1967) 64 I. T. R. 409. If therefore the order of penalty had been made by the Income-tax Officer under sec. 28 (1) (c) it would have been unassailable by reason of sec. 297 (2) (a) read with sec. 28 (1) (c ). ( 4 ) BUT the order of penalty is made under sec. 274 (2) read with sec. 271 (1) (c) and it is therefore necessary to see whether it could be properly made under sec. 271 (1) (c ). sec. 271 (1) is the section in the new Act which provides for imposition of penalty in certain specified circumstances and the material portion of that section runs as under:- 271 Failure to furnish returns comply with notices concealment of income etc. :- (1) If the income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act is satisfied that any person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-sec. (1) of sec. 139 or by notice given under sub-sec. (2) of sec. 139 or sec. 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-sec. (1) of sec. 139 or by such notice as the case may be or (b) has without reasonable cause failed to comply with a notice under sub-sec. (1) of sec. 142 or sub-sec. (2) of sec. 139 or sec. 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-sec. (1) of sec. 139 or by such notice as the case may be or (b) has without reasonable cause failed to comply with a notice under sub-sec. (1) of sec. 142 or sub-sec. (2) of sec. 143 or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income he may direct that such person shall pay by way of penaltyxxx xxx xxx xxx xxx xxx xxx xx. Sec. 274 prescribes the procedure to be followed before imposing penalty under sec. 271 (1) and it says inter alia:-274 Procedure:- (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard or has been given a reasonable opportunity or being heard. (2) Notwithstanding anything contained in clause (iii) of sub-sec. (1) of sec. 271 if in a case falling under clause (c) of that sub-section the minimum penalty impossible exceeds a sum of rupees one thousand the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall for the purpose have all the power conferred under this Chapter for the imposition of penalty. If we look at sec. 271 (1) it is clear that before the Income-tax Officer can initiate any proceedings for imposition of penalty he must be satisfied in the course of any proceedings under this Act that is in the course of any proceedings under the new Act that any person has committed any of the defaults specified in clauses (a) (b) and (c) of the section. The satisfaction of the Income-tax Officer in the course of any proceedings under the new Act that any of the defaults specified in clauses (a ). (b) and (c) has been committed is a condition precedent to the initiation of proceedings by the Income-tax Officer for imposition of penalty and if the condition precedent is satisfied the Income-tax Officer can after giving a reasonable opportunity to the assessee of being heard make an order imposing penalty on the assessee. Now in the present case by reason of sec. Now in the present case by reason of sec. 297 (2) (a) the proceeding for assessment of the assessee was as pointed out above a proceeding under the old Act and it was in the course of that proceeding that the Income-tax Officer was satisfied that the assessee had concealed the particulars of income or deliberately furnished inaccurate particulars of income The satisfaction of the Income-tax Officer was therefore not arrived in the course of any proceeding under the new Act and the condition precedent to the power of the Income-tax Officer to initiate proceedings for imposition of penalty was not satisfied. The Income-tax Officer had therefore no power to refer the case to the Inspecting Assistant Commissioner and the Inspecting Assistant Commissioner was not entitled to impose penalty on the assessee under sec. 274 (2) read with sec. 271 (1) (c ). ( 5 ) BUT the Revenue relied strongly on sec. 297 (2) (g) and contended that by reason of the provision enacted in sec. 297 (2) (g) the Inspecting Assistant Commissioner on reference of the case by the Income-tax Officer was entitled to initiate proceedings for imposition of penalty and to impose penalty on the assessee under sec. 274 (2) read with sec. 211 (1) (C ). This contention turned primarily on the true interpretation of sec. 297 (2) (g) but in order to arrive at its proper construction it is also necessary to refer to sec. 297 (2) (g ). These two clauses of sec. 297 (2) deal with the subject of imposition of penalty and they provide as follows : 297 (2) Notwithstanding the repeal of the Indian Income-tax Act 1922 (hereinafter referred to as the repealed Act ). xxx xxx xxx xxx xxx xxx xxx xxx (F) any proceeding for the imposition of a penalty in respect of any assessment completed before the 1st day of April 1962 may be initiated and any such penalty may be imposed as if this Act had not been passed; (G) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March 1902 or any earlier year which is completed on or after the 1st day of April 1962 may be initiated and any such penalty may be imposed under this Act. The argument of the Revenue was that the assessment in the present case was for the assessment year 1960-61 and it was completed on 24th November 1962 and therefore under sec. 297 (2) (g) a proceeding for imposition of penalty in respect of such assessment could be initiated and penalty could be imposed under the new Act. Sec. 271 (1) it was argued was the only relevant provision of the new Act under which penalty could be imposed and therefore the conclusion was inevitable that the proceeding for imposition of penalty could be initiated and penalty could be imposed under the relevant clause of sec. 271 (1 ). So far as sec 297 (2) (a) was concerned the Revenue sought to escape its applicability by contending that if sec. 297 (2) (a) stood alone in a case falling under it penalty would have been liable to be Imposed under sec. 28 (1) of the old Act but when the penalty was incurred under sec. 28 (1) of the old Act by reason of the income-tax Officer being satisfied in the course of the assessment proceeding about any of the defaults enumerated in clauses (a) (b) and (c) of sec. 28 (1) sec. 297 (2) (g) intervened and provided that the proceeding for imposition of such penalty should be initiated and such penalty should be imposed not under sec. 28 (1) of the old Act but under sec. 27 (1) of the new Act This argument conceded that where as in a case falling under sec. 297 (2) (a ). the assessment proceed ing is under the old Act the defaults entailing penalty would ordinarily be defaults enumerated in clauses (a) (b) and (c) of sec 28 (1) of the old Act but the penalty for such defaults it was said was not liable to be imposed under sec. 28 (1) of the old Act but was liable to be imposed under sec. 271 (1) of the new Act. This argument though at first blush attractive is in our opinion not well-founded and our reasons for saying so are as follows: ( 6 ) WE may point out at the outset that the penalty provided under sec. 27 (1) is in some ways more rigorous and harsh than that provided under sec. 28 (1) of the old Act. This argument though at first blush attractive is in our opinion not well-founded and our reasons for saying so are as follows: ( 6 ) WE may point out at the outset that the penalty provided under sec. 27 (1) is in some ways more rigorous and harsh than that provided under sec. 28 (1) of the old Act. Sec. 271 (1) provides that in certain cases if any penalty is imposed it should not be less than a certain minimum prescribed in the section whereas no such minimum penalty was prescribed under sec. 28 (1 ). No prosecution could be instituted under sec. 28 (1) in respect of the same facts on which a penalty was imposed but under the new Act not only can a penalty be imposed but a prosecution can also be launched upon the same facts. Now the effect of accepting the argument of the Revenue would be that in respect of defaults committed under the old Act the more rigorous and harsh penalty provided under the new Act would be liable to be imposed even where the defaults might have been committed prior to the commencement of the new Act. This would indeed be a startling proposition and unless there are clear words used by the legislature compelling us to reach such a conclusion we would be reluctant to place a construction on sec. 297 (2) (g) which leads to such a result. Sec. 297 (2) (g) is punitive in effect and must therefore be strictly construed. The coverage of the section must be confined to that which is clear and explicit. If the section is of doubtful and ambiguous meaning we should not attempt to extract out of that ambiguity a new and added obligation not formerly cast upon the assessee. With these preliminary observations we will now turn to examine the true meaning and content of sec. 297 (2) (g ). ( 7 ) IF we look at secs. If the section is of doubtful and ambiguous meaning we should not attempt to extract out of that ambiguity a new and added obligation not formerly cast upon the assessee. With these preliminary observations we will now turn to examine the true meaning and content of sec. 297 (2) (g ). ( 7 ) IF we look at secs. 297 (2) (f) and 297 (2) (g) together it is clear that what the Legislature has intended to provide is that the imposition of penalty in respect of an assessment completed before 1st April 1962 should be governed by the old Act while imposition of penalty in respect of an assessment for the year ending 31st March 1962 or any earlier year completed on or after 1st April 1962 should be governed by the new Act. when and under what circumstances should penalty be liable to be imposed in respect of an assessment completed before 1st April 1962 should be determined by reference to the provisions of the old Act and when and under what circumstances penalty should be liable to be imposed in respect of an assessment for the year ending on 31st March 1962 or any earlier year completed on or after 1st April 1962 should be determined by reference to the provisions of the new Act. Secs 297 (2) (f) and 297 (2) (g) do not enact a provision for imposition of penalty but merely lay down that in a case covered by sec. 297 (2) (f) the old Act shall apply in relation to imposition of penalty while in a case falling within sec. 297 (2) (g) imposition of penalty shall be governed by the new Act. If in a case covered by sec. 297 (2) (f) one wants to find out whether any penalty is liable to be imposed one must turn to the old Act while in a case falling within sec. 297 (2) (g) one must turn to new Act. But in either case whether covered by sec. 297 (2) (f) or sec. 297 (2) (g) the case must fall within the relevant provision imposing penalty under the old Act or the new Act as the case may be before any penalty can be imposed under such provision. 297 (2) (g) one must turn to new Act. But in either case whether covered by sec. 297 (2) (f) or sec. 297 (2) (g) the case must fall within the relevant provision imposing penalty under the old Act or the new Act as the case may be before any penalty can be imposed under such provision. A proceeding for imposition of penalty can therefore be initiated and penalty can be imposed on the assessee under the new Act only if the conditions for the applicability of sec. 271 (1) are satisfied. Just as sec. 297 (2) (f) does not dispense with the fulfilment of the conditions requisite for the applicability of sec. 28 (1) sec. 297 (2) (g) does not dispense with the fulfilment of the conditions requisite for the applicability of sec. 271 (1 ). If the conditions attracting the applicability of sec. 271 (1) are not satisfied in a case falling within sec. 297 (2) (g) no proceeding for imposition of penalty can be initiated and penalty imposed under sec. 271 (1 ). ( 8 ) WE cannot accept the contention of the Revenue that the liability to penalty is in such a case incurred under sec. 28 (1) by reason of sec. 297 (2) (a) and it is only the initiation of proceeding for imposition of the penalty and the ultimate imposition of penalty which have to be done under sec. 271 (1) by virtue of sec. 297 (2) (g ). It is no doubt true that for a default which is declared to be penal by one statute a subsequent statute may provide with retrospective effect a different kind of penalty than that provided by the former statute. But we do not think that such is the effect of the provision enacted in sec. 297 (2) (g ). If the Legislature wanted to declare that even in respect of defaults committed under clauses (a) (b) and (c) of sec. 28 (1) penalty shall be levied according to the measure provided in sec. 271 (1) we have no doubt that the Legislature would have said so in clear and explicit terms and not left its intention to be gathered from language of doubtful implication. The legislature could have easily provided that if any defaults enumerated in clauses (a) (b) and (c) of sec. 271 (1) we have no doubt that the Legislature would have said so in clear and explicit terms and not left its intention to be gathered from language of doubtful implication. The legislature could have easily provided that if any defaults enumerated in clauses (a) (b) and (c) of sec. 28 (1) are committed by the assessee such defaults shall be deemed to be defaults under the corresponding clauses (a) (b) and (c) of sec. 271 (1) and proceeding for the imposition of penalty for such defaults may be initiated and such penalty may be imposed under the relevant clause of sec. 271 (1 ). But quite apart from this consideration it is difficult to see how it can be said that in enacting sec. 297 (2) (g) the Legislature was providing the measure of penalty set out in sec. 271 (1) for defaults committed under clauses (a) (b) and (e) of sec. 28 (1 ). This argument could have had some plaubibility if the conditions on the fulfilment of which penalty was liable to be imposed under sec. 28 (1) were the same as the conditions inviting the imposition of penalty under sec. 271 (1 ). But we find that the conditions attracting the applicability of the penalty under sec. 28 (1) are different from those attracting the imposition of penalty under sec. 271 (1 ). The penalty under sec. 28 (1) is liable to be imposed if the Income-tax Officer is satisfied about any of the defaults specified in clauses (a) (b) and (c) in the course of any proceeding under the old Act whereas the penalty under sec. 271 (1) is attracted only if the Income-tax Officer is satisfied about any of the defaults specified in clauses (a) (b) and (c) of that section in the course of any proceeding under the new Act. The defaults specified in clauses (a) and (h) of sec. 28 (1) are defaults in complying with the provisions of the old Act while the defaults enumerated in clauses (a) and (b) of sec. 271 (1) are defaults in complying with the provisions of the new Act. It is no doubt true that the acts required to be done under the provisions of the old Act referred to in clauses (a) and (b) of sec. 271 (1) are defaults in complying with the provisions of the new Act. It is no doubt true that the acts required to be done under the provisions of the old Act referred to in clauses (a) and (b) of sec. 28k1) are of the same nature as the acts required to be done under the sections of the new Act referred in clauses (a) and (b) of sec. 271 (1) but that does not mean that the defaults under clauses (a) and (b) of sec. 28 (1) are the defaults for which penalty is provided under sec. 271 (1 ). To use the language of the Criminal Law we cannot say that penalty under sec. 271 (1) is provided for the offence committed under sec. 28 (1 ). If sec. 271 (1) had provided a different kind of penalty for the offence committed under sec. 28 (1) it might perhaps have been possible to read sec. 297 (2) (g) as providing that for the offence under sec. 28 (1) proceeding for imposition of penalty may be taken and penalty may be imposed under sec. 271 (1 ). But that is not the position here and we cannot therefore take the view that under sec. 297 (2) (g) though the liability to penalty is incurred under sec. 28 (1) in the course of the assessment proceeding under the old Act proceeding for imposition of the penalty can be initiated and the penalty can be imposed under sec. 271 (1 ). Sec. 297 (2) (g) can be invoked only where it is found that in a case falling within that section the conditions attracting the imposition of penalty under sec. 271 (1) are satisfied and penalty can be properly and legitimately imposed under that section. ( 9 ) THE Revenue urged that if this construction were accepted sec. 297 (2) (g) would be rendered superfluous and otiose and there would be no case which would fall within that section. This argument can be of little avail in the construction of a section which is punitive in effect but even on merits we do not think it is well-founded Even on the view we have taken cases falling within sec. 297 (2) (b) and sec. 297 (2) (d) (ii) would be covered by sec. 297 (2) (8 ). This argument can be of little avail in the construction of a section which is punitive in effect but even on merits we do not think it is well-founded Even on the view we have taken cases falling within sec. 297 (2) (b) and sec. 297 (2) (d) (ii) would be covered by sec. 297 (2) (8 ). It may also be noted and indeed it was not disputed on behalf of the Revenue that secs. 297 (2) (f) and 297 (2) (g) are not exhaustive of the cases of imposition of penalty and therefore it would not be right to place a strained construction on sec. 297 (2) (g) for the purpose of expanding its scope and ambit. We must therefore reach the conclusion that the Revenue cannot avail of sec. 297 (2) (g) for the purpose of invoking the applicability of sec. 271 (1) and the order of penalty made by the Inspecting Assistant Commissioner under sec. 274 (2) read with sec. 271 (1) must be held to be without jurisdiction. ( 10 ) OUR answer to the question referred to us is therefore in the negative. The Commissioner will pay the costs of the Reference to the assessee. Appeal accordingly. .