1989 (6) TMI 88 - AT - Income Tax

Summary

Issues: Penalty imposed under section 273

Analysis:
The judgment pertains to an appeal against the penalty imposed under section 273 amounting to Rs. 2,92,959. The appellant, a registered partnership firm, was assessed for the assessment year 1983-84. The penalty proceedings were initiated based on discrepancies in the income estimate filed by the appellant. The Inspecting Assistant Commissioner found that the appellant had deliberately filed a false estimate of advance tax, leading to the imposition of the penalty. The appellant challenged the validity of the penalty notice, arguing that it did not specify the default under a particular sub-section of section 273. However, the Inspecting Assistant Commissioner contended that the assessment order clearly outlined the default committed by the appellant, justifying the penalty proceedings.

The Commissioner of Income-tax (Appeals) canceled the penalty order, stating that since the penalty order was canceled on facts, the legality of the notice issued under section 273 was not necessary to be examined. The appellant had filed a revised estimate of Rs. 11 lacs plus, which led to a reduction in the assessed income after appeal effect. The Commissioner of Income-tax (Appeals) held that the penalty could not be levied based on the earlier estimate filed in June 1982, as the revised estimate brought down the difference to less than 25 percent, indicating that the earlier estimate was not false.

The appellate tribunal disagreed with the appellant's contention that the penalty could not be levied based on the earlier estimate once a revised estimate was filed. The tribunal emphasized that penalty is exigible for any false estimate, whether it is the first, second, or revised estimate. The tribunal reinstated the penalty imposed by the Inspecting Assistant Commissioner, highlighting that the appellant's conduct, including failure to make full payment of advance tax as per the revised estimate, supported the penalty imposition.

The tribunal also rejected the appellant's plea to reduce the quantum of penalty to the minimum, emphasizing the appellant's conduct in underestimating the income despite indications of higher income. The tribunal concluded that the penalty was justified based on the appellant's actions and upheld the imposition of the penalty amount of Rs. 2,92,959.

In conclusion, the tribunal allowed the appeal and reinstated the penalty imposed under section 273 on the appellant partnership firm. The judgment highlights the importance of accurate income estimation for advance tax purposes and the consequences of filing false estimates leading to penalty imposition.