1983 (7) TMI 97 - AT - Income Tax

Summary

Issues:
1. Validity of notice u/s 210 for payment of advance tax.
2. Imposition of penalty u/s 273(c) for failure to file estimate of advance tax.
3. Reasonable cause for failure to file estimate u/s 212(3A) of the Act.

Analysis:
1. The judgment involves the appeal of M/s Devi Prasad Saboo & Sons, HUF, regarding the validity of a notice issued by the ITO under section 210 of the Income Tax Act for the payment of advance tax. The notice was addressed to an individual, Devi Prasad Saboo, and not to the assessee-HUF. The assessee contended that the penalty order was invalid as no notice was served on the assessee-HUF, and it was not obligatory for the HUF to pay advance tax. The Tribunal considered the arguments and found that the notice was valid, as the assessee had acted on it by filing an estimate of total income and making advance tax payments, implying acceptance of the notice.

2. The imposition of a penalty under section 273(c) of the Act for the failure to file an estimate of advance tax was also challenged in the appeal. The ITO had levied a penalty of Rs. 2,000 on the assessee-HUF for not filing the estimate as required under section 212(3A) of the Act. The Tribunal examined the reasons provided by the assessee for the delay in filing the estimate, which included incomplete accounts of firms from which the HUF derived income. Considering the circumstances, the Tribunal held that there was a reasonable cause for the failure to file the estimate, and thus, the penalty under section 273(c) was deemed not exigible in this case.

3. The Tribunal further analyzed the details of the income derived by the assessee-HUF from two firms, General Engineers Corporation and General Engineers Workshop, and the challenges faced due to incomplete accounts of these firms. The delayed completion of accounts led to uncertainty regarding the exact share income of the HUF, justifying the failure to file the estimate within the specified timeline. The Tribunal accepted the arguments presented by the assessee's counsel, Mr. N.K. Bhuraria, and concluded that the failure to file the estimate was due to a reasonable cause, thereby allowing the appeal by the assessee.

4. In conclusion, the Tribunal allowed the appeal by the assessee, ruling in favor of M/s Devi Prasad Saboo & Sons, HUF, on the grounds of the validity of the notice u/s 210, the imposition of penalty u/s 273(c), and the reasonable cause for the failure to file the estimate u/s 212(3A) of the Income Tax Act. The judgment highlighted the importance of considering the specific circumstances and reasons behind non-compliance with tax provisions before imposing penalties, ensuring a fair and just outcome in tax matters.