1979 (5) TMI 14 - HC - Income Tax

Summary

Issues Involved:
1. Justification of penalty imposition under section 273(a) of the Income-tax Act, 1961.
2. Computation of penalty leviable with reference to advance tax payment of Rs. 15,000 only.
3. Consideration of Rs. 76,150 payment by cheque on March 15, 1961, as advance income-tax payment.

Detailed Analysis:

1. Justification of Penalty Imposition under Section 273(a) of the Income-tax Act, 1961:

The Tribunal confirmed the penalty under section 273(a) as the estimate of advance tax filed by the assessee was found to be untrue, and the assessee knew or had reason to believe it to be untrue. The Tribunal observed that the assessee filed only one estimate on September 27, 1960, showing a tax liability of Rs. 15,000, but later sent a cheque of Rs. 76,150 on March 15, 1961, indicating that the initial estimate was incorrect. The Tribunal concluded that the penalty was exigible due to the untrue estimate and the assessee's awareness of its inaccuracy.

2. Computation of Penalty Leviable with Reference to Advance Tax Payment of Rs. 15,000 Only:

The Tribunal's decision to compute the penalty with reference to the advance tax payment of Rs. 15,000 was based on the assessee's submission of an estimate on September 27, 1960, which was later found to be untrue. The Tribunal held that the payment of Rs. 76,150 by cheque on March 15, 1961, could not be considered as advance tax payment due to the lack of a revised estimate. The Tribunal emphasized that the letter dated March 20, 1961, from the assessee could not be equated with an estimate of advance tax payable.

3. Consideration of Rs. 76,150 Payment by Cheque on March 15, 1961, as Advance Income-tax Payment:

The High Court examined whether the payment of Rs. 76,150 by cheque on March 15, 1961, could be considered as advance income-tax payment. The court noted that the Tribunal had found that the cheque was not accompanied by a revised estimate, which was necessary under section 18A of the 1922 Act. The court referred to the Tribunal's findings and concluded that the payment without a revised estimate could not be considered as advance tax. The court also discussed the legal principle that payment by cheque, unless dishonored, is considered payment on the date the cheque is handed over. However, in this case, the absence of a revised estimate rendered the payment non-compliant with the statutory requirements for advance tax.

Conclusion:

The High Court affirmed the Tribunal's decision, holding that the payment of Rs. 76,150 by cheque on March 15, 1961, could not be considered as advance income-tax payment due to the lack of a revised estimate. Consequently, the penalty imposed under section 273(a) was justified. The court emphasized the importance of submitting a revised estimate for the payment to be considered as advance tax and upheld the Tribunal's findings on the matter.