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TMI Blog1990 (5) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... econd instalment of advance tax of Rs. 74.50 lakhs was paid on15th Sept., 1975. On15th Dec., 1975the assessee filed a revised estimate of advance tax of income on Rs. 781.82 lakhs with advance tax payable at Rs. 449 lakhs. As a sum of Rs. 149 lakhs had already been paid, the assessee paid the balance of Rs. 300 lakhs on15th Dec., 1975. The return of income for asst. yr. 1976-77 was filed on4th Oct., 1976showing income of Rs. 1006.44 lakhs. Income as per assessment order dt.31st Oct., 1988was determined at Rs. 1086.76 lakhs. 4. The estimate of advance tax filed on12th June, 1975showed the following details of income and deductions: 1. Interest on securities : Rs. 0.05 lakhs 2. Profit Gains of business Rs. 440.13 lakhs 3. Income from other sources . . Dividends Rs. 3.60 lakhs . Total Rs. 443.78 lakhs . Less : Deductions under Chapter VI- A : Rs. 54.17 lakhs . Income subject to advance tax Rs. 389.61 lakhs 5. The ITO at the time of original assessment charged interest under s. 216. Ultimately the matter reached the Tribunal whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with which we agree, the technical objection raised by the learned counsel is hereby over-ruled. 8. The learned counsel for the assessee then submitted that the first appellate authority had examined the record on the basis of which the estimate of advance tax was filed on12th June, 1975and had come to a conclusion that there was no dispute with the profit side of the calculations. According to him the difference was only with regard to three items as per details given below: . . Deductions estimated. Deductions claimed in the return. . . Rs. lakhs Rs. lakhs 1. Development rebate 35 31.33 2. Capital expenditure on scientific research assets 100 85.32 3. Under s. 80 MM 10 5.70 It was submitted that as regards the first item regarding development rebate, when the estimate was filed the addition to plant and machinery as informed by the accounts division were of the order of Rs. 140 lakhs and on this basis development rebate @ 25 per cent was claimed at Rs. 35 lakhs. As regards capital expenditure on scientific research, our attenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emently contended that the learned CIT(A) was wrong in upholding the levy of interest under s. 216. 9. The learned Departmental Representative contended that the assessee was properly advised by competent tax consultants and experts and had a full Department to advise it on tax and related matters. In that view of the matter, so ran the argument, there could be no excuse for wrongly calculating the deduction under s. 80MM at hundred per cent when the correct rate was 40 per cent. It was also pointed out that while the CIT(A) had admitted additional evidence, of the assessee and considered its arguments contained in a letter dt.19th Feb., 1987, the ITO's reply dt.16th Feb., 1987had not been taken into account. As regards the discrepancies in the items relating to development rebate and capital expenditure on scientific research assets, he strongly relied on the order of the CIT(A). According to him the assessee had deliberately filed an underestimate of advance tax and interest under s. 216 had been rightly charged. 10. In reply, Dr. Narayanan, submitted that the claim of hundred per cent deduction under s. 80MM was made under a wrong impression and not with a view to de-fraudin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee could pay advance tax on the basis of income of Rs. 390 lakhs, it could have easily paid advance tax in respect of an income of say Rs. 394 lakhs. Having regard to all the facts and circumstances of the case, we are of the considered view that is not a fit case for levy of interest which is hereby deleted. We also find substantial merit in the submissions of the learned counsel for the assessee that the learned CIT(A) had not admitted any fresh evidence while deciding the issue and that the assessee was merely responding to the representation made by the ITO as to certain facts which he had submitted by way of a chart, a copy of which is placed at page 27-A of the assessee's compilation. 12. In the result, ground No. 1 of the assessee's appeal succeeds and grounds No. 1 and 2 in the Revenue's appeal, are rejected. 13. The only other ground in the assessee's appeal is with regard to the charging of interest under s. 220(2) of the IT Act at Rs. 3,06,150. Sec. 220(2) lays down that if the amount specified in any notice of demand issued under s. 156 of the IT Act is not paid within 35 days of the service of the notice, the assessee shall be liable to pay simple interest at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt., 1979. After the receipt of the Tribunal's order dt.11th April, 1986in Department's appeal the ITO gave another opportunity to the assessee to show-cause why penalty under s. 273(a) be not levied. The ITO finally came to the conclusion that assessed tax vide order dt.3rd Nov., 1986came to Rs. 6,44,96,861 75 per cent of which came to Rs. 4,83,72,646. As the advance tax paid by the assessee amounted to Rs. 4.49 crores, the ITO worked out the shortfall at Rs. 34,72,646. The minimum penalty @ 10 per cent, according to the ITO worked out to Rs. 3,47,265. He, however, levied penalty @ 30 per cent which came to Rs. 10,41,795. 18. The learned CIT(A) vide his impugned order held that the profit calculations made in the assessee's revised estimate of advance tax filed on 15th Dec., 1975 were all right, but the deductions claimed by the assessee were not based on verifiable records. He, however, concluded that the assessee had not deliberately filed wrong estimates of advance tax, but there was only a certain degree of negligence. He consequently reduced the amount of penalty from 30 per cent to 10 per cent and directed the ITO to recompute the quantum of penalty accordingly. 19. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed by the CIT(A) may be deleted. 20. The learned Departmental Representative, on the other hand, submitted that the CIT(A) was not correct in saying that the assessee could be accused only of a certain degree of negligence. As regard the quantum of penalty it was submitted that the assessee was liable to penalty under s. 273(a) and that on the facts and circumstances of the case the penalty @ 30 per cent was quite reasonable and should be approved and to that extent, the order of the CIT(A) may be modified. 21. We have carefully considered the rival submissions as also the facts on record. We find substantial merit in the arguments of the learned counsel for the assessee. As held by the Calcutta High Court in the case of Birla Cotton Spg. Wvg. Mills Ltd. the burden of proving that an estimate of advance tax submitted by the assessee was false or inaccurate to his knowledge is on the Revenue. Such estimate cannot be made with mathematical precision. Mere disparity between the estimate submitted by the assessee and in the income he himself returned or the ITO finally determined in the assessment by itself would not justify imposition of penalty under s. 273 of the IT Act. In ..... 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