What are the potential consequences of non-compliance during assessment proceedings?

Non-compliance during income tax assessment proceedings can lead to severe consequences:

1. Best Judgment Assessment (Section 144): If the taxpayer fails to file return or comply with notices/orders, the AO can estimate total income to the best of their judgment and determine tax liability.

2. Penalty Proceedings: Non-compliance can attract penalties under Sections 271 and 272A such as penalty for concealment of income, failure to comply with notices, furnish inaccurate particulars, etc.

3. Prosecution Proceedings: The taxpayer may be prosecuted under Sections 276C, 277, etc. for willful tax evasion, delivering false statements, falsifying books of accounts, etc.

4. Deemed Tax Arrears: Any outstanding tax demand gets treated as tax arrears in default and recovery actions can be initiated under Section 222 onwards.

However, reasonable cause defenses can be raised to avoid penalties/prosecution in genuine cases as per multiple court rulings.