1976 (5) TMI 53 - AT - Income Tax

Summary

Issues:
- Penalty imposed under section 273(c) of the IT Act, 1961 for failure to file an estimate of advance tax under section 212(3A) for the assessment year 1971-72.

Detailed Analysis:

1. Background:
The appeal before the Appellate Tribunal ITAT Madras-B was against the cancellation of a penalty of Rs. 769 imposed by the Income Tax Officer (ITO) under section 273(c) of the IT Act, 1961, for the assessment year 1971-72. The penalty was imposed due to the assessee's failure to file an estimate of advance tax under section 212(3A) by the specified date.

2. Assessee's Arguments:
The assessee argued before the AAC that the share income, which was a significant part of their total income, was not available before the end of March 1971. The assessee contended that there was no malafide intent in failing to file the estimate under section 212(3A) and that there was a reasonable cause for the failure.

3. AAC's Decision:
After considering the evidence, the AAC found that the assessee had a reasonable cause for not filing the estimate of advance tax. The AAC accepted the assessee's contention that the share income details were not available until after the specified date, leading to a bonafide belief that there would not be a significant increase in income for the assessment year 1971-72. Consequently, the AAC cancelled the penalty.

4. Revenue's Appeal:
The Revenue appealed the AAC's decision, arguing that the share income had been increasing over the years, and the assessee could have estimated the income based on the firm's books. The Revenue contended that the non-receipt of share income before the deadline did not constitute a reasonable cause for failure to file the estimate.

5. Tribunal's Analysis and Decision:
The Tribunal examined whether there was a valid reason for the penalty under section 273(c) of the Act. It was noted that the assessee had complied with the demand for advance tax under section 210 and had a genuine belief that the income would not significantly increase. The Tribunal emphasized that penalties for statutory obligations require deliberate defiance or contumacious conduct, which was not evident in this case. Referring to legal precedents, the Tribunal concluded that the breach was minor and not deliberate, thus upholding the AAC's decision to cancel the penalty.

6. Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the cancellation of the penalty imposed by the ITO. The decision was based on the lack of deliberate defiance of statutory obligations and the assessee's genuine belief regarding the income increase for the relevant assessment year.