9911796707
|
Home
Issues Involved:
1. Whether the Tribunal was correct in law in cancelling the orders of penalty under section 273 of the Income-tax Act, 1961. Detailed Analysis: 1. Facts and Background: The case involves a State Government undertaking that filed returns disclosing losses for the assessment years 1963-64 and 1964-65. The Income-tax Officer (ITO) found that the assessee had not complied with section 212(3) of the Income-tax Act, 1961, and imposed penalties under section 273 for not paying advance tax. The penalties were Rs. 94,892 and Rs. 1,13,550 for the respective years. The Appellate Assistant Commissioner (AAC) confirmed these penalties, noting discrepancies in depreciation claims and non-disclosure of interest income. The Tribunal, however, cancelled the penalties, concluding that the assessee had a bona fide belief that no tax was payable, and thus, the penalties were not justified. 2. Tribunal's Findings: The Tribunal held that the assessee was not aware that its claims of losses would be substantially reduced and that the depreciation claims were initially accepted by the ITO. The Tribunal found no mens rea (guilty intent) in the assessee's actions and noted that the advice given to the assessee regarding depreciation was incorrect. The Tribunal also considered that the interest income was not actually received during the relevant period and would have been offset by previous losses. Therefore, the Tribunal concluded that the assessee had a bona fide belief that no tax was payable and was not required to comply with section 212(3). 3. Legal Analysis: Under section 212(3), an assessee must submit an estimate of current income and advance tax if the income is likely to exceed a specified amount. Section 273(b) allows penalties if the assessee fails to furnish this estimate without reasonable cause. The Tribunal's finding that the assessee had a bona fide belief of no tax liability amounts to a finding of reasonable cause. 4. Precedents and Legal Principles: The judgment references several precedents: - CIT v. S. Teja Singh: This case involved a legal fiction for failure to send an estimate of tax, which is not directly applicable here. - Kashmir Vastralaya v. CIT: This case established that the initial burden to show a lack of reasonable cause lies with the Revenue. - H. H. Maharani Sharmishthabai Holkar v. Addl. CIT: This case affirmed that mens rea is not required for penalties under section 273(c). - Hindustan Steel Ltd. v. State of Orissa: The Supreme Court held that no penalty can be levied where the breach flows from a bona fide belief. - Addl. CIT v. Roshan Lal Kuthiala: This case established that whether there is a reasonable cause is a question of fact. - CIT v. Co-operative Cane Development Union Ltd.: This case held that a bona fide belief of income exemption is a reasonable cause for not depositing advance tax. 5. Conclusion: The Tribunal's decision to cancel the penalties was justified based on the assessee's bona fide belief and consistent pattern of filing returns. It was held that the assessee had reasonable cause for not filing the estimate of advance tax, and hence, no penalty under section 273(b) was leviable. The question was answered in favor of the assessee and against the Revenue. Judgment: The Tribunal was correct in law in cancelling the orders of penalty under section 273 of the Income-tax Act, 1961. The parties will bear their own costs.
|
