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TMI Blog1995 (3) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned by him in his reply. In his earlier reply, the assessee had explained that by reason of the challan having been misplaced, he could not pay the advance tax of Rs. 8,050 but when the mistake came to his notice at the time of filing the return he paid the tax under s. 140A at Rs. 10,202 on 4th June, 1986. The AO did not feel satisfied with this explanation and he held the assessee defaulter for s. 273(2)(a) as well. Thus the AO found the assessee defaulter for both the provisions of s. 273, namely, s. 273(2)(a) as well as s. 273(2)(b) of the Act. The AO levied a penalty of Rs. 10,000 accordingly. 3. In appeal, the learned CIT(A) held that since the assessee had filed an estimate of advance tax payable, he was not a defaulter for the purposes of levying penalty under s. 273(2)(b). He further held that since the proceedings were not initiated for assessee's default punishable under s. 273(2)(a), he was not to be visited with penalty under that provision either. The learned CIT(A) thus cancelled the penalty and allowed assessee's appeal. 4. The learned Departmental Representative submitted that the defect, if any, either in the notice issued under s. 274 or in the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase may be, sub-cl. (i) of cl. (d) of sub-s. (1) of s. 209 or (b) Where he has not previously been assessed by way of regular assessment under this Act, an estimate of (i) the current income, and (ii) the advance tax payable by him on the current income calculated in the manner laid down in s. 209, and shall pay such amount of advance tax (I) in a case falling under cl. (a), as accords with the statements in equal instalments on the dates applicable in his case under s. 211; and (II) in a case falling under cl. (b), as accords with the estimate in equal instalments on such of the dates applicable in his case as have not expired, or in one sum if only the last of such dates has not expired." 7. It may be seen that the obligation cast on an assessee, who had not been previously assessed by way of regular assessment under the Act, was to send to the ITO an estimate of (1) his current income, and (ii) the advance tax payable by him on the current income. The further requirement was to pay the amount of advance tax payable. This last obligation is clearly borne out from the heading given to this section as also from the clause "and shall pay such amount of advance tax" used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of regular assessment, but have not paid the instalment of advance tax despite AO's notice under s. 210 or have failed to pay the advance tax as per their estimates of current income despite such notice. The default contemplated in this section is related to the non-compliance of AO's order passed under s. 210(3) or 210(4) of the Act. The default contemplated is specifically punishable under s. 221 of the Act. 10. The provisions contained in either s. 273(2)(a) or (b), on the contrary, do not necessitate the issue of any order of AO under s. 210 for their application. They intend to punish an assessee who had either totally failed to furnish the estimate of the advance tax payable or if he has furnished one the same is found untrue to his knowledge. This s. 218 and s. 273(2)(a) and (b) materially differ in their purposes and field of operation. 11. At this stage we would like to deal with another requirement for imposing the penalties enumerated under Chapter XXI of the Act. Sec. 274 lays down the procedure for levying such penalties. Sub-s. (1) of s. 274 which is relevant for our purpose, runs as under: "Sec. 274(1): No order imposing a penalty under this Chapter shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er proceedings. But the true nature and character of the mistake, defect or omission shall have to be considered with reference to effect or consequences from the mistakes, defects or omissions upon the decisions of the issue involved in a given a case. 13. Now coming to the merits of the case, we find that the assessee admittedly is a person who had not hitherto been assessed to tax by way of regular assessment. In view of that factual position, the provisions of s. 209A(1)(b) were applicable. Further since he had furnished an estimate of advance tax, though not paid such tax, the provisions of s. 273(2)(b) were not applicable to his case. The view of the AO that since the assessee had not paid advance tax and hence he was a defaulter for the purposes of s. 273(2)(b) was obviously wrong. 14. The main requirement for attracting the provisions of s. 273(2)(b) is the failure of an assessee to furnish the estimate of advance tax payable. The further requirement of paying advance tax flows from the language of s. 209A(1)(b) which has not been referred to in s. 273(2)(b), though the same has been used in the language of s. 273(2)(a). What had not been intended by the legislature in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applied to the benefit of the assessee. 16. In the Madras case, which was a case for penalty under s. 221, the Madras High Court held that simply because an assessee has incurred the liability to pay penalty, it is not obligatory on the part of the officer to levy a penalty, whether a penalty should be levied or not and if so what should be the quantum of the penalty will depend on the facts and circumstances of each case which will primarily concern whether the default was wilful or merely accidental. 17. Likewise, in the Gujarat case which was a case for default punishable under s. 273(2)(c) the Gujarat High Court held that `liability for penalty under s. 273(2)(c) is incurred by the assessee only when the assessee fails to furnish an estimate of advance tax payable by him in accordance with the provisions of s. 212(3A). Sec. 273(2)(c) does not deal with the liability which may arise because of failure of the assessee to pay such amount of advance tax as accords with his estimate of advance tax'. That is also a point which we have highlighted at an earlier part of this order. Both these cases fully support our view point and, therefore, we hold that imposition of any penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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