9911796707
TMI Blog1995 (5) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... on which tax payable worked out to Rs. 45,000, which was paid. The return declaring income at Rs. 2,25,107 was filed for the asst. yr. 1985-86 but the assessment was completed on total income of Rs. 2,87,901. The Assessing Officer initiated penalty proceedings. 3. In response to show-cause notice, it was contended before the Assessing Officer that the difference between the current income estimated by the assessee for the purposes of advance tax estimate and the income assessed arose on account of certain disallowances which could not be predicted at the time of filing the estimate. Hence, the penalty is not exigible. The Assessing Officer did not accept the explanation on the ground that the disallowances made by the Assessing Officer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly lead to the conclusion that the assessee had not estimated its current income correctly. The assessee has maintained its account on mercantile basis and, therefore, it was necessary for it to provide for liability of the year of account. During the course of assessment proceedings, the assessee had furnished explanation in respect of provisions made under different heads of account and it has not been found by the Assessing Officer that such provisions were not made bona fide. He vehemently argued that the very fact that the Assessing Officer has allowed the provisions to the extent of Rs. 38,000 goes to suggest that the assessee's claim was not bogus. According to Shri Jain, the onus of proving that the assessee had paid lesser advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that provision for freight was also made without any basis, as the assessee had provided the expenses on estimate only. Moreover, it was found that the provision for stationery and printing was, in fact, not made on the basis of bills received, as contended by the assessee. Shri Vijayvargiya argued that from the very nature of the provisions made by the assessee under the above three heads, the assessee could very well foresee that such provisions would not be allowed in assessment. Therefore, the assessee was under obligation to file higher estimate of advance tax and failure to do so has invited penalty, which has been confirmed in first appeal and deserves to be sustained. Shri Vijayvargiya referred to the decision of Hon'ble Madhya Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38,000 only would be allowed in assessment. We are inclined to agree with the submissions made by Shri Jain, the learned counsel for the assessee, that the penalty order does not speak that the assessee had preferred bogus claim and the provisions were made only with a view to avoid payment of proper advance tax. In our considered view disallowance of certain expenses claimed by the assessee cannot be made basis for levy of penalty on the ground that the assessee should have visualised such disallowance at the time of filing advance tax estimate. Moreover, the assessee cannot be visited with penalty on the ground that no appeal was preferred against the disallowance made in the assessment. We are, therefore, of the view that it is not a fit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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