1989 (5) TMI 100 - AT - Income Tax

Summary

Issues:
Challenge to imposition of penalty under section 273(2)(a) of the Income Tax Act, 1961 for assessment year 1981-82.

Analysis:
The assessee contested the penalty imposed by the Income Tax Officer (ITO) under section 273(2)(a) of the Income Tax Act, 1961, for filing an estimate of advance tax that was deemed untrue. The ITO noted that the assessee's return showed an income of Rs. 51,652, while the income determined after appeal effect was Rs. 21,103. The ITO imposed a penalty of Rs. 1,500, stating that the assessee failed to explain satisfactorily why the estimate was incorrect. The assessee argued before the Deputy Commissioner of Income Tax (Appeals) that the estimate was based on the share income from a firm, which had been revised under an Amnesty Scheme. The Deputy Commissioner upheld the penalty, stating that the assessee should have filed a correct estimate of advance tax based on the original income. The assessee then appealed to the Appellate Tribunal.

The authorized representative for the assessee argued that the estimate was filed in good faith based on the share income from the firm, which was the main source of income. Due to an increase in the firm's income under the Amnesty Scheme, the assessee's income also increased, leading to the penalty. The representative cited a case law to support the argument that the assessee should not be penalized when the firm had already been penalized for a similar offense. On the other hand, the Departmental Representative supported the penalty, emphasizing that the default was clear, and multiple notices had been issued regarding the same.

After considering the submissions, the Tribunal found that the assessee's main income source was the share from the firm, which had already been penalized for a similar offense. Citing the case law provided, the Tribunal concluded that penalizing the assessee in this case was not justified. The Tribunal vacated the penalty order, stating that the penalty proceedings should not have been initiated. The Tribunal allowed the appeal, overturning the penalty imposed under section 273(2)(a) of the Income Tax Act, 1961 for the assessment year 1981-82.

The Tribunal also noted that the case law referenced by the Departmental Representative did not support the Revenue's position due to differences in facts. The decision to vacate the penalty order was based on the specific circumstances of the case and the legal arguments presented by the parties.