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Penalty and assessment proceedings are independent proceedings. Penalty proceedings follow assessment proceedings and start much later so that their outcome may sometime even help strengthen case in quantum proceedings. The taxpayer has a statutory right to furnish additional evidence even subsequent to assessment stage before Commissioner (Appeals) and the Tribunal. However no additional evidence can be let in at the stage of reference before the High Court.

The SC in 424ITR1 taking cognizance of evidence produced and explanation made of purchase transactions in penalty proceedings deleted the addition in quantum appeal. In this case the assessee produced affidavits and statements of unregistered dealers to the satisfaction of Commissioner (Appeals) to prove the purchase transactions of marbles in small lots from several unregistered dealers in penalty proceedings which order dated 13.1.2011won him appeal in quantum before the SC after about 10 years. In this case the assessee produced additional evidence in penalty appeal that lead to his success in quantum .

One must therefore make a second case to produce evidences in penalty proceedings that are left out in assessment proceedings fro want of availability or other unavoidable difficulty. However inordinate delay without proper explanation may have less credence vide 370ITR712.

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