1995 (1) TMI 118 - AT - Income Tax

Summary

Issues:
- Appeal against levy of penalty under section 273(1)(b) of the Income-tax Act, 1961 for non-compliance with advance tax provisions.
- Interpretation of assessed tax and computation of minimum penalty amount.

Analysis:
1. The appeal was filed by the assessee against the penalty imposed under section 273(1)(b) of the Income-tax Act, 1961 for not adhering to the due date for payment of advance tax instalments. The Assessing Officer levied the minimum penalty for default under section 209A(1)(a) as the assessee failed to file a statement of advance tax by the specified date.

2. The CIT (Appeals) upheld the penalty, noting the non-compliance with section 209A(1)(a). The assessee then appealed further, arguing that the penalty was unwarranted or excessive. The assessee's representative contended that the minimum penalty amount was incorrect, citing provisions of section 273(1)(b)(ii) and section 215(5) of the Act to support their argument.

3. The assessee's advocate argued that the assessed tax should be Rs. 47,683, and the minimum penalty should be 10% of 75% of this amount, resulting in a penalty of Rs. 3,576. The departmental representative, however, proposed a penalty of 10% of the assessed tax, amounting to Rs. 4,768. The departmental representative also relied on the first appellate authority's order to support the penalty imposition.

4. After considering the arguments, the tribunal found the case suitable for penalty imposition due to the assessee's default under section 209A(1)(a) without reasonable cause. The tribunal agreed with the assessee's representative that the minimum penalty amount was excessive. The tribunal interpreted the provision of section 273(1)(b)(ii) in favor of the assessee, determining the minimum penalty to be Rs. 3,576 based on the assessed tax of Rs. 47,683.

5. The tribunal rejected the contention that the surcharge should not be included in the assessed tax calculation, stating that the surcharge on income tax should be considered. The tribunal resolved the ambiguity in the provision by interpreting it in favor of the assessee, directing the Assessing Officer to levy a penalty of Rs. 3,576 accordingly.

6. Consequently, the appeal was partly allowed, and the minimum penalty amount was reduced to Rs. 3,576 in line with the tribunal's interpretation of the assessed tax computation for penalty purposes.