1975 (7) TMI 33 - HC - Income Tax

Summary

Issues:
- Penalty imposed under section 18A(9) of the Indian Income-tax Act, 1922 for filing a wrong estimate deliberately to conceal income.
- Interpretation of penalty provisions under section 18A(9) in comparison to section 28(1)(c) of the Act.

Analysis:
The judgment pertains to a reference under section 66(2) of the Indian Income-tax Act, 1922, involving a private limited company engaged in tanning raw hides. The Income-tax Officer issued a notice requiring the assessee to pay advance tax, based on an estimate provided by the assessee. Subsequently, during assessment, the Income-tax Officer determined a higher total income than the estimate, leading to a penalty under section 28(1)(c) for furnishing an untrue estimate. The Appellate Assistant Commissioner reduced the penalty considering the assessee's explanation for part of the additional income. Upon further appeal, the Tribunal set aside the penalty under section 28(1)(c), leading to the issue of whether penalty under section 18A(9) could still be imposed.

The Tribunal primarily relied on its cancellation of the penalty under section 28(1)(c) to delete the penalty under section 18A(9). However, a subsequent reference against the cancellation of the penalty under section 28(1)(c) highlighted that the omitted income was not justified due to the assessee's accounting practices. The Division Bench found that the failure to include the omitted amount in the estimate was deliberate, leading to the setting aside of the penalty order. The assessee argued that the language of section 18A(9) was milder than section 28(1)(c), but failed to provide any extenuating circumstances to justify the omission.

The court rejected the assessee's argument that it was unaware of the omission until pointed out by the auditor in a later year. It was established that the assessee deliberately filed a wrong estimate to conceal income and avoid paying proper advance tax. The court ruled in favor of the department, upholding the penalty under section 18A(9) against the assessee. The judgment emphasizes the importance of accurate estimates and the consequences of deliberate attempts to conceal income.