1995 (3) TMI 169 - AT - Income Tax

Summary

Issues Involved:
1. Penalty under Section 273(2)(b) of the IT Act, 1961 for failure to file an estimate of advance tax payable.
2. Penalty under Section 273(2)(a) of the IT Act, 1961 for filing an untrue estimate of advance tax payable.
3. Applicability and interpretation of Sections 209A, 218, and 273 of the IT Act, 1961.
4. Procedural requirements under Section 274 of the IT Act, 1961.
5. Curable irregularities under Section 292B of the IT Act, 1961.

Detailed Analysis:

1. Penalty under Section 273(2)(b) of the IT Act, 1961:
The Assessing Officer (AO) initiated penalty proceedings against the assessee for failing to file an estimate of advance tax payable, which is punishable under Section 273(2)(b) of the IT Act, 1961. The assessee had filed the estimate on 13th Dec., 1985, but had not paid the advance tax. The AO deemed the assessee a defaulter under Section 273(2)(b) for not paying the advance tax.

2. Penalty under Section 273(2)(a) of the IT Act, 1961:
The AO also noted that the estimate of advance tax payable by the assessee was untrue and initiated proceedings under Section 273(2)(a) for filing an untrue estimate. The assessee explained the non-payment of advance tax due to a misplaced challan and subsequent payment under Section 140A. The AO found the explanation unsatisfactory and held the assessee a defaulter under both Sections 273(2)(a) and 273(2)(b), levying a penalty of Rs. 10,000.

3. Applicability and Interpretation of Sections 209A, 218, and 273:
Section 209A outlines the obligation to file an estimate of advance tax and pay the amount. The Tribunal agreed with the assessee's counsel that the non-payment of advance tax is punishable under Section 218 and not under Sections 273(2)(a) or 273(2)(b). Section 218 deals with the default of not paying advance tax despite AO's notice under Section 210, while Sections 273(2)(a) and 273(2)(b) punish failure to furnish an estimate or furnishing an untrue estimate, respectively. The Tribunal emphasized that the purpose of these provisions is to enforce the payment of the correct amount of advance tax, not necessarily to punish the assessee.

4. Procedural Requirements under Section 274:
Section 274(1) requires that no penalty be imposed without giving the assessee a reasonable opportunity of being heard. The Tribunal noted that the AO had given the assessee an opportunity to be heard, fulfilling the procedural requirements. The Tribunal clarified that Section 274 does not necessitate issuing a statutory notice as a condition precedent for initiating penalty proceedings.

5. Curable Irregularities under Section 292B:
Section 292B states that any mistake, defect, or omission in proceedings that are in substance and effect in conformity with the Act does not invalidate the proceedings. The Tribunal held that any procedural mistakes or defects are curable irregularities and do not vitiate the proceedings.

Conclusion:
The Tribunal found that the assessee had filed an estimate of advance tax, thus not attracting the provisions of Section 273(2)(b). The non-payment of advance tax did not fall under Section 273(2)(a) or 273(2)(b) but under Section 218. The AO's interpretation was incorrect. The Tribunal upheld the CIT(A)'s order canceling the penalty, though for different reasons, and dismissed the appeal.