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TMI Blog1987 (8) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... This notice took into consideration the previously assessed total income of Rs. 2,53,10,000 and, therefore, demanded the tax thereon amounting to Rs. 1,43,47,719 in three equal instalments payable on or before15-6-1974,15-9-1974and15-12-1974. It was submitted on behalf of the revenue that instead of paying the tax in accordance with this notice served upon the assessee the assessee filed an estimate of its total income and the tax payable thereon u/s. 212. This estimate was filed for the first time on13-6-1974. In this estimate, total income was taken as nill and consequently, the tax payable also was shown as nil. 3. Thereafter, the assessee filed, it was contended, a revised estimate on7-9-1974. In this estimate, the total income was taken at Rs. 3,11,31,000. The tax payable thereon was estimated at Rs. 1,79,78,000. As per this estimate this tax of Rs. 1,79,78,000 was payable in two equal instalments of Rs. 89,89,000. The assessee rounded off the payment from the figure to Rs. 90 lakhs and paid the same on13-9-1974. 4. Thereafter the assessee filed the third estimate on13-12-1974, in which the income was estimated at Rs. 1,76,92,000 and the tax payable was worked out at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifies the imposition of penalty of 25 per cent of the shortfall. It was, thus, contended that the ld. CIT (A) erred in tinkering with the order of the ITO and reducing the penalty as he did. 7. Particularly attacking the order of the ld. CIT (A) on the ground of taking into consideration the quantum of interest levied u/s. 215 of the Act in reducing the penalty, the Id. D. R. contended that the decisions of the Id. CIT (A) is contrary to the law laid down by the Supreme Court in the case of Gursahai Seigal v. CIT [1963] 48 ITR 1. 8. It was contended that the mere fact that there was wide variation between the income finally assessed and the income declared in the estimate filed on 13-12-1974 should be, in view of the ratio decidendi, of the Allahabad High Court judgment in the case of CIT v. U.P. Tannery Co. (P.) Ltd. [1977] 107 ITR 842 should be sufficient to hold that or to raise an assumption that the estimate filed by the assessee on13-12-1974was to the knowledge of the assessee untrue. Therefore, penalty should not have been reduced by the ld. CIT (A) in the manner he did. 9. It was further contended that it is not for the ITO necessarily to prove that the estimate file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered at this stage without difficulty. 12. Proceeding to support his submissions that penalty is not leviable on the assessee on merits he submitted that the ITO has himself considered that the first and second estimates filed on 13-6-1974 and 7-9-1974 were such that no allegation could be fastened upon the assessee of the type that is necessary for invoking th provisions of sec. 273(a), i.e., the knowledge of the assessee that the estimate of total income and the advance tax payable was such that he could have reason to believe it to be false or untrue. Coming to the details of these estimates, the learned counsel for the assessee projected that he had placed before the authorities below full facts as to how the estimates came to be made by the assessee. In this regard, he thought fit to compare the figures taken by the assessee in the two estimates one filed on7-9-1974and the other filed on13-12-1974. He stated that he would like to take these figures because the estimate filed on7-9-1974had been considered as bona fide and the bona fides of the assessee had been questioned on the basis of the estimate filed on13-12-1974. Taking the figures in the estimates filed on5-9-1974, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 whereas previous year of the assessee ended on 31-12-1974 and by the time the estimate was filed the assessee should be aware of the figures practically of the whole accounting period, and it was also argued that the deductions, which the assessee had taken into consideration were also considered while filing the return and still there was wide variation of course between the total income returned and the estimate filed on 13-12-1974. 14. The learned counsel for the assessee availing of the rejoinder for his own appeal submitted that due to far flung established businesses of the assessee, the figures for computing the total income and the tax payable are called much in advance than imagined by the learned D. R. and, therefore, figures taken for computing the estimate to total income and the tax payable in advance as per the estimate filed on 13-12-1974 were the figures for the period of 10 months. The penalty retained by the learned CIT (A) may, therefore, be cancelled. 15. We have given careful consideration to the rival submissions. Before we come to the purely legal aspect about the computation of penalty impassable u/s. 273(a) projected to us by the ld. counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so much higher that the finally assessed tax came to Rs. 2,02,96,173. 17. The estimate filed by the assessee on13-12-1974shows that the assessee examined various claims made in the estimate filed on7-9-1974. For examples, the claim for development rebate in the estimate made on7-9-1974was Rs. 91,11,000, whereas the claim for development rebate was at Rs. 1,40,00,000 in the estimate made on13-12-1974. There is also manor variation upwards in the claim of depreciation in so far as the figure goes up from Rs. 3,82,79,000 to Rs. 3,87,00,000. However we find that the figure of capital expenditure for scientific research has been maintained in both the estimates at Rs. 43 lakhs. Before the Income-tax Officer as well as before the ld. CIT (A) the assessee was unable to establish as to why this figure of Rs. 43 lakhs firstly taken and secondly sustained in the estimate filed on 13-12-1974 had been kept the same when actuals expenditure was less in the assessment framed the Income-tax Officer allowed actual expenditure of Rs. 12,81,972. Before us except for claiming that it was estimate of the scientific research expenditure no reason has been given why when the last estimate was framed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to believe it to be untrue. The question, therefore, is as to what should be the quantum of penalty leviable. In this regard, we have to consider the legal issue raised on behalf of the assessee by its learned counsel. According to him, in working out the penalty impossible, the ITO has omitted to consider the provisions of section 273(1)(a)(i)(2) of the Act. This can be done by finding out the amount, which would have been payable by way of advance tax if the assessee had furnished a correct and complete statement in accordance with the provisions of clause (a) of sub-section (1) of section 209A, of the Act. Now, this to our mind requires investigation on facts. This issue was not raised before the authorities below. Therefore, at this stage, we reject this contention outright, as without investigation of facts, it cannot be decide and having not been raised earlier, the assessee is not entitled to do so at this stage. 21. Considering the entirety of the facts and the circumstances of the case and each of the reason that we have assigned for holding that the penalty is imposable. We are of the opinion that the penalty at the rate or 15 per cent of the shortfall is justified. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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