1986 (2) TMI 99 - AT - Income Tax

Summary

Issues:
Penalty imposition under section 273 of the Income Tax Act based on alleged default in advance tax filing and payment.

Analysis:
The judgment involves an appeal against a penalty of Rs. 2,100 imposed by the Income Tax Officer (ITO) under section 273 of the Income Tax Act. The assessment was completed under section 143(1) of the Act, with the ITO computing the tax payable at Rs. 17,150. The ITO initiated penalty proceedings under section 273 for advance tax default, specifically referring to the default under section 209A(1)(a) of the IT Act. The penalty was imposed for not filing the estimate of advance tax under section 209A(4) of the Act, resulting in a penalty of Rs. 2,100 after deductions for advance tax paid under section 210.

The appellant contended that the penalty proceedings were vague, contradictory, and illegal. The appellant argued that the initiation of penalty proceedings lacked specificity as the particular sub-section or clause of section 273 was not mentioned. Additionally, there were contradictions between the default referred to in the show-cause notice (section 209A(1)(a)) and the penalty imposed (section 209A(4)). The appellant claimed that the estimate of advance tax filed after the due date was invalid, rendering the penalty unjustifiable. The appellant further argued that the penalty order lacked clarity on the specific default under section 273 and was based on vague grounds, urging for its quashing.

Upon careful consideration, the tribunal agreed with the appellant's contentions. It found the initiation of proceedings to be vague and illusory, failing to specify the exact default for which penalty proceedings were initiated. The tribunal noted contradictions in the penalty imposition, where the penalty was based on a false estimate despite no statement of advance tax being filed. The estimate filed beyond the allowed period was deemed invalid, making the penalty unjustifiable. The tribunal concluded that the penalty order was riddled with contradictions and illegalities, rendering it void ab initio. Consequently, the tribunal annulled the order confirming the penalty, allowing the appeal in favor of the appellant.