9911796707
|
Home
Issues involved: Interpretation of penalty u/s 273(a) of the Income-tax Act, 1961 based on the calculation method for determining the shortfall in advance tax payment.
Summary: The High Court of Delhi considered a case where an assessee-company, engaged in financing, filed an estimate of advance tax showing nil tax payable despite having income. The Income Tax Officer (ITO) assessed the total income higher than the estimate, resulting in a penalty u/s 273(a) for shortfall in tax payment. The Tribunal favored the assessee's contention on the calculation method for determining the shortfall, leading to a reference to the High Court on the issue. The Court analyzed the relevant sections of the Income-tax Act, 1961 concerning advance tax payment and penalty provisions. It noted that the statute requires the assessee to estimate and pay tax on the current year's income, with provisions for interest and penalty for underpayment. The penalty u/s 273(a) is triggered when the advance tax falls short of 75% of the tax determined on regular assessment, subject to adjustments for tax deductible at source and other factors. The Court deliberated on the interpretation of the penalty calculation method proposed by the Department and the assessee. It emphasized the legislative intent behind the provisions, highlighting the margin of error allowed in advance tax payment. The Court concluded that the assessee should pay a penalty based on the shortfall in tax paid after deducting the tax deductible at source from 75% of the tax determined on regular assessment. Furthermore, the Court emphasized the principle of construing taxing statutes in favor of the assessee in case of ambiguity or doubt, citing relevant case law. It clarified that its decision should not be misconstrued as casting doubt on the construction of the provisions discussed in the judgment. In conclusion, the High Court answered the reference question in favor of the assessee, affirming the Tribunal's decision on the penalty calculation method. No costs were awarded in the case.
|
