1983 (7) TMI 68 - AT - Income Tax

Issues Involved:
1. Non-compliance with sub-section (3A) of section 212 of the Income-tax Act, 1961.
2. Validity of estimates filed by the appellants.
3. Interpretation of sub-section (3A) of section 212.
4. Applicability of penalties under section 273(c).
5. Relevance of judicial precedents cited by the appellants.
6. Reasonable cause for the default under section 273(c).
7. Quantum of penalty to be imposed.

Detailed Analysis:

1. Non-compliance with sub-section (3A) of section 212 of the Income-tax Act, 1961:
The appellants, partners in Modern Engg. & Moulding Co., were penalized for not complying with sub-section (3A) of section 212 of the Income-tax Act, 1961. The last date for filing the estimate of advance tax and paying advance tax for the assessment year 1975-76 was 15-12-1974. The appellants filed their estimates on 28-12-1974, which was beyond the due date.

2. Validity of estimates filed by the appellants:
The appellants filed estimates declaring their liability to pay advance tax higher than the amounts demanded by the Income-tax Officer (ITO) under section 210. The authorities below found that the estimates were not valid under sub-section (3A) of section 212 since they were filed after the due date and the difference between the estimated tax and the tax demanded was less than one-third.

3. Interpretation of sub-section (3A) of section 212:
The Tribunal examined the provisions of sub-section (3A) of section 212, which requires an estimate to be filed if the estimated advance tax exceeds the tax demanded under section 210 by more than 33 1/3 percent. The Tribunal held that an estimate filed showing higher advance tax than demanded under section 210 would be valid under sub-section (3A) of section 212, even if the difference was less than one-third.

4. Applicability of penalties under section 273(c):
The Tribunal agreed with the revenue that the estimates had to be filed before the last installment date, i.e., 15-12-1974. Since the estimates were filed on 28-12-1974, they were not in accordance with sub-section (3A) of section 212. Therefore, the default under section 273(c) was established.

5. Relevance of judicial precedents cited by the appellants:
The appellants cited decisions from CIT v. Kohinoor Flour Mills and Chandrakant Damodardas v. ITO to support their case. The Tribunal found that these decisions did not advance the appellants' case as they dealt with different provisions and contexts.

6. Reasonable cause for the default under section 273(c):
The appellants argued that they filed estimates based on information from the firm and had no mala fide intention. They also contended that since the firm was penalized, the partners should not be penalized for the same default. The Tribunal found no provision barring penalty on partners if the firm was penalized and rejected the appellants' explanation.

7. Quantum of penalty to be imposed:
The Tribunal considered the appellants' alternative request to limit the penalty to 10 percent of the difference between the assessed tax and the tax demanded under section 210. The Tribunal found this request reasonable and directed the ITO to recompute the penalties accordingly.

Conclusion:
The appeals partly succeeded. The Tribunal upheld the imposition of penalties but directed that they be limited to 10 percent of the difference between the assessed tax and the tax demanded under section 210. The estimates filed by the appellants were found not to be in accordance with sub-section (3A) of section 212 due to the late filing and insufficient difference in tax amounts. The Tribunal rejected the appellants' arguments based on judicial precedents and explanations for the default.

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