1991 (4) TMI 161 - AT - Income Tax

Summary

Issues:
Imposition of penalty under section 273(1)(a) of the Income Tax Act, 1961 based on the accuracy of income estimates filed by the assessee for the assessment year 1982-83.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad-C pertains to the imposition of a penalty under section 273(1)(a) of the Income Tax Act, 1961, based on discrepancies in income estimates filed by the assessee for the assessment year 1982-83. The assessee initially estimated the income at Nil but later revised it to Rs. 3,50,000, paying advance tax of Rs. 77,000. The Income Tax Officer (ITO) completed the assessment at Rs. 10,84,000, leading to penalty proceedings as the tax payable on the assessed income exceeded the advance tax paid. The assessee contended that the difference in income was due to disallowances and additions, not warranting penalty under section 273(1)(a). However, the ITO imposed a penalty of Rs. 8,800, which was upheld by the Commissioner of Income Tax (Appeals) (CIT(A)). The Tribunal was now tasked with reviewing the case.

The counsel for the assessee argued that the income estimate was based on legitimate grounds, citing the claim of unabsorbed deficiency under section 80J of previous years. The assessee believed that certain provisions were ultra vires and unconstitutional, justifying the income estimate. The counsel highlighted the challenge to the constitutional validity of retrospective amendments before the Supreme Court, arguing that the penalty was unwarranted. Conversely, the Department contended that the assessee should have acted based on the existing law, without holding a belief in the unconstitutionality of amendments. The Department emphasized that the subsequent revised income estimate and advance tax payment indicated the assessee's knowledge of the situation.

The Tribunal assessed the facts and circumstances, focusing on whether the assessee could have reasonably believed in the unconstitutionality of amendments while filing the estimate. The Tribunal noted past rejections of the assessee's computations for various assessment years, indicating the acceptance of amended provisions. Despite challenges to the constitutional validity, the Tribunal found that the assessee could not have held a genuine belief in the unconstitutionality of amendments at the time of filing the estimate. The Tribunal rejected the assessee's arguments, upholding the imposition of the penalty under section 273(1)(a). The Tribunal clarified that the lack of action under section 271(1)(c) did not impact the penalty decision under section 273(1)(a). The Tribunal concluded that the penalty was justified based on the circumstances, dismissing the appeal.