1983 (9) TMI 98 - AT - Income Tax

Summary

Issues:
1. Whether the penalty levied by the ITO in respect of the assessment year 1976-77 under clause (c) of section 273(2) of the Income-tax Act, 1961 was justified.

Analysis:
The judgment revolves around the interpretation of clause (c) of section 273(2) of the Income-tax Act, 1961, which imposes a penalty for failure to furnish an estimate of advance tax without reasonable cause. The clause specifies two essential ingredients for penalization: failure to provide an estimate of advance tax as per section 212(3A) and the ITO's satisfaction that the failure was without reasonable cause. The penalty amount is determined based on the extent of the default, ranging from ten percent to one and a half times the shortfall in tax payment under section 210.

The judgment emphasizes the distinct treatment of non-compliance with obligations under section 212(3A) - filing an estimate of current income and advance tax payment. It clarifies that penalties for non-payment of advance tax under section 218 and failure to file an estimate under section 212 are separate sanctions. The court underscores the legislative intent behind these provisions, highlighting the need for compliance with both obligations independently to avoid penalties.

The court examines the specific case where the assessee failed to file an estimate of advance tax despite paying a higher amount of advance tax than demanded. The Commissioner (Appeals) had canceled the penalty, considering the default as 'technical' without contumacious conduct. However, the court disagrees, emphasizing that the payment of advance tax does not absolve the assessee from filing the estimate as required by law. The judgment stresses that the absence of a filed estimate constitutes a substantive default under clause (c) of section 273(2) unless a reasonable cause is established.

Furthermore, the court dismisses the assessee's argument regarding the amendment to section 64 of the Act, noting that the assessee had sufficient notice of the legislative changes. The judgment concludes that the default under clause (c) of section 273(2) was established, with no reasonable cause presented by the assessee. Consequently, the court vacates the Commissioner (Appeals) order and upholds the imposition of the minimum penalty by the ITO.

In conclusion, the court allows the departmental appeal, affirming the imposition of the penalty for the assessee's failure to file an estimate of advance tax, despite paying a higher amount of advance tax, as required by law.