1982 (12) TMI 57 - AT - Income Tax

Summary

Issues:
- Appeal against cancellation of penalty under section 273(c) of the IT Act 1961 for the assessment year 1976-77.
- Interpretation of section 212(3A) regarding the requirement to file an estimate of advance tax and consequences of non-compliance.

Analysis:

1. The appeal was filed by the department challenging the cancellation of a penalty imposed under section 273(c) of the IT Act 1961 for the assessment year 1976-77. The penalty of Rs. 18,325 was imposed by the ITO due to the assessee's alleged failure to file a valid estimate of advance tax as required under section 212(3A) of the Act.

2. The assessee, an individual, had paid two installments of advance tax and filed an estimate on 15th March, 1976, showing a tax liability of Rs. 45,859. The ITO imposed the penalty based on the substantial shortfall between the estimated tax and the tax ultimately assessed. The CIT(A) later canceled the penalty, finding that the assessee had sent the estimate and paid the tax before the prescribed date, as required by law.

3. The department representative argued that the estimate filed did not meet the threshold required by section 212(3A) for a valid estimate, as it did not exceed 33-1/2% of the advance tax demanded. However, the assessee's representative contended that the estimate was honest and filed within the deadline, fulfilling the statutory requirements.

4. The Tribunal considered both parties' contentions and found that the assessee had indeed filed the estimate and paid the tax before the prescribed date. The Tribunal rejected the department's argument that the estimate was invalid due to not meeting the threshold amount, citing precedents that emphasize substantial compliance with statutory duties to avoid penalties.

5. Referring to legal precedents, the Tribunal held that if the prescribed duty is substantially performed, no penalty should be levied. The Tribunal concluded that the assessee's actions did not warrant a penalty under section 273(c) as there was no deliberate disregard of statutory duties. Therefore, the CIT(A) was justified in canceling the penalty, and the appeal was dismissed.