1982 (6) TMI 80 - AT - Income Tax

Summary

Issues:
1. Confirmation of penalty under section 273 of the IT Act, 1961 by the CIT (Appeals).
2. Justification of penalty imposed on the assessee for underestimating advance tax payable.
3. Assessment of penalty quantum and applicability of different sections under the IT Act.

Analysis:

Issue 1:
The appeal was filed by the assessee against the order of the CIT (Appeals) confirming the penalty imposed by the ITO under section 273 of the IT Act, 1961. The penalty was imposed due to the assessee's underestimation of advance tax payable.

Issue 2:
The CIT (Appeals) found that the assessee knowingly filed an untrue estimate of advance tax payable, leading to the imposition of the penalty. The CIT (Appeals) considered the stability of metal market prices and the wide variation between estimated and returned income as evidence of the assessee's knowledge of the inaccurate estimate.

Issue 3:
The quantum of penalty was contested in the appeal. The CIT (Appeals) determined a higher penalty than the minimum imposable under section 273(a) due to an additional default under section 273(c). However, the Tribunal found that the ITO's order only pertained to section 273(a) and reduced the penalty to the minimum imposable under that section, considering the lack of notice on the additional default.

The Tribunal emphasized that the assessee's obligation to estimate income honestly and reasonably under section 273(a) is crucial. The failure to explain the basis of the estimate and the wide disparity between estimated and actual income supported the imposition of the penalty. The Tribunal distinguished previous cases cited by both parties based on the specific facts and circumstances of the present case.

In conclusion, the Tribunal partially allowed the appeal, reducing the penalty to the minimum imposable under section 273(a) alone, after considering the Tribunal's order in the quantum appeal.