1982 (3) TMI 121 - AT - Income Tax

Summary

Issues:
Penalty under section 273(1)(b)(ii) of the Income-tax Act, 1961 for default under section 209A(1)(a) - Assessment year 1979-80.

Analysis:
The appellant contested a penalty of Rs. 550 imposed by the ITO under section 273(1)(b)(ii) of the Income-tax Act, 1961, and upheld by the AAC for default under section 209A(1)(a). The appellant, an old assessee, did not file an estimate of advance tax until after the due date for the first installment. The ITO, while imposing the penalty, noted the appellant's explanation that it did not file the advance tax statement as its income was below the taxable limit until the due date of the first installment. The AAC confirmed the penalty, leading to the appeal.

The appellant argued that it was not mandatory to file the estimate of income under all circumstances until the due date of the first installment, as per section 209A. The appellant contended that it had a bona fide belief that its income was below the taxable limit and highlighted that it filed an estimate and paid tax by the third installment. The departmental representative argued that the appellant's total income exceeded the limit for a registered firm, implying lack of bona fide belief.

Upon careful consideration of sections 209A and 273, the Tribunal found that the appellant was only obligated to file the estimate if it believed its current income would exceed the specified amount. The Tribunal noted that the ITO did not provide an opportunity for the appellant to substantiate its belief that its income was below the taxable limit before rejecting it. The ITO's order did not show a verification of the appellant's explanation, leading to the cancellation of the penalty as the appellant was not obligated to file the estimate under all circumstances, as per section 209A.

Therefore, the Tribunal allowed the appeal, canceling the penalty imposed by the ITO and confirmed by the AAC.