JUDGMENT JUDGMENT judgment of court was delivered by G. G. SOHANI J.-By this reference under section 256(1) of Income-tax Act, 1961 (hereinafter referred to as " Act"), Incometax Appellate Tribunal, Indore Bench, has referred following question of law to this court for its opinion: " Whether, on facts and in circumstances of case, Tribunal is justified in holding that since penalty proceedings were not initiated during course of regular assessment proceedings but were initiated while revising assessment under section 155(1) of Income-tax Act, levy of penalty under section 273(b) of Incometax Act is bad in law? " material facts giving rise to this reference, briefly, are as follows: assessees are partners in registered firm. They filed returns of income for assessment years 1974-75 to 1976-77 declaring their share income from firm. Income-tax Officer completed assessments and did not initiate any action against assessees under section 273 of Act. Later on, on completion of assessment of firm, Income-tax Officer proceeded to rectify assessments under section 155 of Act and at that stage, proceedings under section 273(b) of Act were initiated against assessees. It was contended on behalf of assessees that as penalty proceedings were not initiated against them in course of regular assessments, proceedings commenced by Income-tax Officer were not valid. Income-tax Officer overruled that objection and levied penalties under section 273(b) of Act. Aggrieved by those orders, assessees preferred appeals. Appellate Assistant Commissioner upheld contentions urged on behalf of assessees and held that since penalty proceedings had not been initiated during course of regular assessment-proceedings under section 143 or section 144 of Act, penalty proceedings initiated by Income-tax Officer while revising assessments under section 155 of Act were illegal. orders imposing penalty passed by Income-tax Officer were accordingly set aside. Aggrieved by those orders, Revenue preferred appeals before Tribunal. Tribunal held that no case was made out for interference with orders passed by Appellate Assistant Commissioner. Tribunal, therefore, dismissed appeals. Aggrieved by those orders, Revenue sought reference and it is at instance of Revenue that aforesaid question of law has been referred to this court for its opinion. Shri Mukati, learned counsel for Revenue, contended that Tribunal erred in holding that penalty proceedings initiated under section 273 of Act were not valid. Placing reliance on decision of Supreme Court in S. Sankappa v. ITO [1968] 68 ITR 760, it was contended that proceedings under section 155 of Act were part of proceedings for assessment and hence provisions of section 273 of Act were attracted. In reply, Shri Bagadiya, learned counsel for assessees, contended that proceedings under section 273 of Act could be initiated only if in course of proceedings in connection with regular assessment, Income-tax Officer was satisfied that assessee had committed any act specified in that provision.. It was contended that expression " regular assessment " did not take within its ambit proceedings under section 155 of Act. From perusal of provisions of section 273 of Act, it is clear that it contemplates initiation of proceedings under section 273 of Act " in course of any proceedings in connection with regular assessment for assessment year ". expression " regular assessment " occurring in section 273 has been defined by section 2(40) of Act to mean, unless context otherwise requires, assessment made under section 143 or section 144 of Act. There was no corresponding provision in 1922 Act defining expression " regular assessment ". In view of provisions of section 2(40) of Act, short question that arises for consideration is whether proceedings under section 155 of Act can be held to be part of proceedings under section 143 or 144 of Act. Learned counsel for assessees referred to number of decisions holding that reassessment proceedings under section 147 of Act cannot be regarded as part of regular assessment proceedings for purpose of levying penalty under section 273 of Act (See Gates Foam & Rubber Company v. CIT [1973] 90 ITR 482 (Ker), CIT v. Ram Chandra Singh [1976] 104 ITR 77 (Pat), Smt. Kamla Vati v. CIT [1978] 111 ITR 248 (P & H), CIT v. Ganeshram Nayak [1981] 129 ITR 43 (Orissa), D. Swarup, ITO v. Gammon India Limited [1983] 141 ITR 841 (Bom), CIT v. Pratap Singh of Nabha[1982]138 ITR 27 (Delhi) and ClT v. Smt. Jagjit Kaur [1980] 126 ITR 540 (All)). It appears to be view of majority of High Courts that assessment under section 147 of Act cannot be regarded as part of assessment proceedings under section 143 or 144 of Act. Section 148 of Act refers to assessment under section 147. Therefore, assessment under section 147 cannot mean same thing as assessment under section 143 or section 144 of Act. That is why amendment was made in section 215 of Act by Taxation Laws (Amendment) Act, 1984, whereby sub-section (6) was inserted in section 215 providing that when in relation to assessment year assessment is made for first time under section 147, assessment so made shall be regarded as regular assessment for purpose of sections 215, 216, 217 and 273 of Act. But for this deeming provision, assessment made for first time under section 147 could not have been held to be " regular assessment " as contemplated by section 273 of Act. It was urged before us that just as assessment under section 147 is not part of assessment under section 143 or 144 of Act, similarly amendment (of assessment) under section 155 of Act cannot be held to be part of assessment under section 143 or 144 of Act. To appreciate this contention, it is necessary to ascertain nature of order passed under section 155 of Act. Now, section 155 of Act confers power on Income-tax Officer to amend order of assessment if conditions specified in that provision are fulfilled. other provision which empowers Income-tax Officer to amend order of assessment passed by him is section 154. But for these two provisions, Income-tax Officer would have had no power to amend order provisions, Income-tax Officer would have had no power to amend order of assessment passed by him. Therefore, what Income-tax Officer does under section 154 or 155 of Act is to amend assessment already made. In this connection, following observations of Supreme Court in S. Sankaappa's case [1968] 68 ITR 760 are pertinent (p. 764): " It is clear that, when proceedings are taken for rectification of assessment to tax either under section 35(1) or section 35(5) of Act of 1922, those proceedings must be held to be proceedings for assessment. In proceeding under those provisions, what Income-tax Officer does is to correct errors in, or rectify orders of assessment made by him, and orders making such corrections or rectifications are, therefore, clearly part of proceedings for assessment. " It was urged before us on behalf of assessees that in Sankappa's case [1968] 68 ITR 760 (SC), supreme Court was considering provisions of 1922 Act which did not contain any definition of expression it regular assessment ". But decision in Sankappa's case [1968] 68 ITR 760, does not turn on meaning of expression " regular assessment ". That decision merely lays down that orders passed under section 35(1) or section 35(5)of 1922 Act, corresponding to section 154 or section 155 of 1961 Act, are clearly part of proceedings for assessment.. If order of assessment amended under section 155 has been passed under section 143 of Act, then order under section 155 would be part of proceedings for assessment under section 143 of Act. However, if order of assessment, which has been amended, has been passed under section 144 or section 147 of Act, then order of amendment (of assessment) under section 155 of Act would be part of proceedings for assessment under section 144 or section 147, as case may be. When order is passed under section 155, to ascertain as to whether it is part of proceedings for assessment under section 143, section 144 or section 147 of Act, one has to turn to order of assessment which has been amended. If it has been passed under section 143, as has been done in instant case, then action taken under section 154 or section 155 would be part of proceedings for assessment under section 143 of Act. It was, however, contended on behalf of assessee that order under section 155 was passed by Income-tax Officer after expiry of period of limitation provided by section 153 for making assessment under section 143 and hence, in instant case, order under section 155 could not be held to be part of proceedings for assessment under section 143 of Act. It was, however, conceded that order under section 155 was passed before expiry of period prescribed therefor by section 155. Sections 153 and 155 have to be construed harmoniously and if order passed under section 155 is not invalid on ground that it is barred by limitation, then it would not cease to be part of proceedings for assessment, as held by Supreme Court in Sankappa's case [1968] 68 ITR 760, because it was passed beyond period prescribed in section 153 of Act. Our attention was then invited to provisions of section 215(3) of Act and it was contended that if order under section 154 or section 155 had been part of proceedings for regular assessment, then Legislature would not have made specific provision in section 215(3), providing that where as result of order under section 154 or section 155, amount on which interest was payable, was reduced, then excess interest paid would be refunded. In our opinion, however, even in absence of specific provision contained in section 215(3), assessee would have become entitled to refund of interest if, as result of order under section 154 or section 155, amount on which interest was payable, was reduced. To remove any doubt in that behalf, section 215(3) has been enacted. In this connection, reference to decision in CIT v. Rajalakshmi Mills Limited [1980] 125 ITR 141 (Mad) would be instructive. In that case, question for consideration was whether in absence of any specific provision in section 214, corresponding to sub-section (3) of section 215, interest under section 214 was to be allowed on amount of refund attributable to relief under section 80J allowed in rectification proceedings under section 154. It was urged on behalf of Revenue that assessee was not entitled to any further interest as result of modification of amount by rectification, in absence of any specific provision in that behalf in section 214. Dealing with this contention, it was observed as follows (p. 145): " Thus scheme of Act can be described as follows: As assessee is required to pay advance tax and as his funds are locked up with Government, if assessee had paid advance tax in excess of tax due under regular assessment, then on excess so paid, asseseee would be entitled to interest. Similarly, where payment of advance tax by assessee was less than seventy-five per cent. of assessed tax, then he has to pay interest to Government at rate of twelve per cent. per annum. scheme is to see that neither State nor assessee loses interest on amount which is either overpaid or underpaid. In cases of over-payment, State pays interest, while in cases of under-payment of advance tax, assessee pays interest. scales are thus held even...... Learned counsel for Commissioner contended that when once interest had been granted in regular assessment, assessee would be eligible for no further interest as result of modification of assessment either by rectification or otherwise. We are unable to accept this submission. We have already seen that there is specific provision made under section 215(3)of Act in order to cover cases of interest payable by assessee where payment of tax was less than seventyfive per cent. as result of rectification or other orders passed in this case. Though such express provision is lacking with reference to interest payable by Government to assessee, assessee would, in scheme as envisaged above, be entitled to interest. rectification of assessment has only effect of making assessment order passed on January 29, 1970, as regular assessment order or correct assessment order. In other words, a'regular assessment' is made regular in truth and in fact as result of rectification. But, if on date on which regular assessment order was passed, Incometax Officer could have granted interest under section 214 with reference to amount of refund due as result of final proceedings, then assessee would be eligible for grant of interest, no doubt, up to date of regular assessment with reference to amount which was paid by him in excess as advance tax. assessee is not to suffer by reason of Income-tax Officer not having made proper'regular' assessment." Therefore, fact that there is specific provision contained in section 215(3) for refund of excess interest where amount on which interest is payable is reduced by order under section 155, does not go to prove that order of rectification under section 155 is not part of proceedings for assessment, as urged on behalf of assessee. Moreover, clause used in section 273 of Act " in course of any proceedings in connection with regular assessment for assessment year " is wide enough to include within its ambit proceedings under section 155 of Act for amendment of assessment made under section 143 or section 144 of Act, which is regular assessment, as defined by section 2(40) of Act, in contradistinction to selfassessment under section 140A, provisional assessment under section 141 before its deletion in year 1971 and assessment or reassessment under section 147 of Act. In instant case, order of assessment, which has been amended under section 155, was passed under section 143(3) of Act and hence it would follow that order passed under section 155 is part of proceedings for assessment under section 143 of Act. Therefore, penalty proceedings, in instant case, must be held to have been initiated during course of proceedings in connection with " regular assessment " within meaning of that expression, as defined by section 2(40) of Act. In our opinion, therefore, Tribunal was not justified in holding that levy of penalty under section 273(b) of Act was bad in law. Our answer to question referred to this court is, therefore, in negative and against assessees. In circumstances of case, parties shall bear their own costs of this reference. *** COMMISSIONER OF INCOME TAX v. SMT. MAMTA TIWARI & ORS.