9911796707
TMI Blog1979 (9) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. In respect of these asst. yrs. Advance tax had been demanded from the assessee in terms of s. 210 amounting to Rs. 3,74,565/- for asst. yr. 1972-73 and Rs. 12,53,988/- for each of the asst. yr. 1973-74 and 1974-75. The demand notices were duly served on the assessee on 15th Feb., 72, 9th March, 73 and 12th March, 74 respectively. The official liquidator, however, filed "Nil" estimates for all these years on the view that the income of the assessee company earned in the course of winding up operation was not liable to income-tax. The ITO however, took the view that the income of the assessee company was liable to income-tax and made the assessment for these years accordingly determining the tax payable at Rs. 9,59,900/- for asst. yr. 1972-73, Rs. 10,41,344/- for asst. yr. 1973-74, Rs. 8,19,830/- for asst. yr. 1974-75. On these facts proceedings were initiated for all these years under s. 273(a) on the ground that the "Nil" estimates filed by the Official Liquidator were untrue 3. In response to the show cause notices issued by the ITO, it was stated by the Official Liquidator that the business of the assessee company was being carried on for beneficial winding up of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income-tax assessment proceedings relating to asst. yrs. 1969-70 and 1971-72 in which these facts had been stated. It was also pointed out that the official Liquidator, being a Government employee, was apt to abide by the expect opinion of the departmental solicitor. It was urged that the bonafide belief of the Official Liquidator was thus, based on sound reasons and hence it could not be said that the 'nil' estimates filed by the assessee were untrue or false or were filed by the assessee with full knowledge that these were untrue or false. Attention of the ld. AAC was also drawn to the observations of the ld. Members of the ITAT, Jaipur in para 24 of the order dt. 30th April, 1977 in ITA No. 175/JP/1974-75 disposing of the appeal for asst. yr. 1971-72. Dealing with levy of interest under s. 217(1A)., the ld,. Members, it was pointed out, had held that the official liquidator had estimated that the current income of the assessee company would be nil as, according to him, the entire income of the assessee Company was exempt from tax and hence the assessee was under no obligation to file an estimate under s. 212(3A). 5. The ld. AAC considered the submissions made on the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed once again that the Official Liquidator had filed nil estimates under the bonafide belief that the assessee's income for these asst. yrs. was not liable to income-tax. This belief, the ld. counsel pointed out, was based on the advice of the departmental solicitor and on the opinions of the various Tax Experts who were consulted. The belief was, thus, sound and well considered and it could not be said that the Official Liquidator had formed the belief only to avoid payment of the tax under s. 210. The ld. counsel also pointed out that the nil estimates had been filed by the Official Liquidator in consultation with the Company Law Judge. All these facts, he said had been placed on the record of the ITO and also stated in the affidavit of the Official Liquidator placed on record in the course of the assessment proceedings for the years 1969-70 and 1971-72. Further, he said that in the reply to the show cause notices given by the ITO a proper explanation mentioning these facts had been given stating the reasons for filing the nil estimates. Referring to the provisions of s. 273 (a), the ld. counsel pleaded that penalty could be imposed only if the estimate filed by the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any proceedings in connection with the regular assessment for the asst. yr. commencing on the 1st day of April, 1970 or any subsequent asst. yr. is satisfied that any assessee (a) has furnished under s. 212 an estimate of the advance tax payable by him which he knew or had reason to believe to be untrue, or.... he may direct that such person shall, in addition to the amount of tax, if any, payable by him, pay by way of penalty a sum..... A plain reading of the provision would show that for the imposition penalty under this provision it has to be established by the Revenue, firstly, that the assessee furnished an estimate of advance-tax payable by him under s. 212 which was untrue and, secondly, such estimate the assessee knew or had reason to believe to be untrue. Dealing with this aspect, their Lordships of the Punjab Harayana High Court held in the case of Bipinlal Kuthiala (3), that the provisions of s. 271 and 273 of the IT Act, 1961, are in pari materia and if penalty under s. 271 is of a penal nature so is the penalty under s. 273 and, therefore, the ratio of the decision of the Supreme Court in Anwarali's case (10), fully applies to the imposition of penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has been held that from the mere disparity between the estimate submitted by the assessee and the income he himself returned or the ITO finally fixed in the assessment, no interference of dishonesty could necessarily and as a matter of law be drawn. In other words, where the income returned by the assessee or the income finally assessed in the assessment happens to be larger than the income estimated by the assessee for advance-tax purpose. It cannot be said on the basis of this disparity alone that the estimate filed by the assessee was untrue or false. 11. Some of the other decisions in favour of the assessee are that the Allahabad High Court decision in CIT vs. Assam Automobile and Accessories Agency (6) and Orissa High Court decision in CIT vs. Biju Patnaik (8). In these cases the importance of bonafide belief of the assessee came up for consideration in different context. In the Allahabad and Gauhati cases their Lordships were dealing with penalty under s. 271 (1) (a). In both cases the assessee believed honesly that his income was below that the taxable limit and, therefore, there was no obligation under s. 139(1) to file the return of income. Their Lordships upheld this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge and intent. 13. The Official Liquidator, as already stated, filed nil estimates as according to him, the income of the assessee-company was not charging to tax at all. This view was taken on the basis of sound legal opinion and expert advice. Dealing with the importance of the legal advice their Lordships of Supreme Court of India held in the case of Concord of India Insurance Co. Ltd. vs. Smt. Nirmala Devi(9) that a company relies on its legal advisor and the manager's expertise is in Company management and not in law. There is no particular reason why, when a company or other person retains a lawyer to advice it or him on legal affairs reliance should not be placed on such Counsel. In the present case, the official Liquidator, had before him the opinion of departmental Solicitor and also the opinion of the various tax experts of the country. He had also taken the permission of the Court for filing the nil estimates after placing before the Hon'ble Company Law Judge all the necessary facts. It has to be held in such circumstances that the Official Liquidator's belief that the income was not taxable was a bonafide one and in filing the nil estimates the Official Liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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