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TMI Blog2005 (1) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 41(1)?" - the question referred by the Tribunal is answered in favour of the assessee and against the Revenue. - - - - - Dated:- 11-1-2005 - Judge(s) : G. S. SINGHVI., JASBIR SINGH. JUDGMENT At the instance of the Revenue, the Income-tax Appellate Tribunal, Chandigarh Bench (for short, "the Tribunal") has referred the following question of law for the opinion of this court; "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the recomputation of penalty imposed under section 273(1)(a) of the Income-tax Act after excluding the addition made to the assessee's income on account of cessation of liability under section 41(1) of the Income-tax Act?" The assessee is engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y recording the following reasons: "It is relevant to point out that in addition to routine additions in the income of the assessee-firm, main additions were made on account of unsupported credits in the name of one Shri Ved Parkash and unsupported credits in 'Palle Khatas' account. The major addition came under section 41(1) for remission of the assessee's liability. To take the major issues one by one, it is not correct to say that the assessee could not foresee the impending additions. Now since the assessee has an unsupported credit, what else can be the result than an addition which is rightly called for. Similarly, in 'Palle Khata' where the assessee has unsupported amounts as credits, the natural result is an addition. To say that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1978-79, by applying the provisions of section 41(1) of the Income-tax Act involved an interpretation of law and although the assessee's appeal on this point had been dismissed by the Commissioner of Income-tax (Appeals) and also by the Income-tax Appellate Tribunal, the question had been admitted in reference by the Punjab Haryana High Court as one involving an important question of law. In the light of these facts, I hold that the assessee could not be expected to foresee the addition of Rs. 5,80,800 and the addition of Rs. 1,30,393 in the assessment years 1977-78 and 1978-79 and, therefore, he could not be expected to take into account these amounts while making the estimate of advance tax. Therefore, merely because the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account while recomputing the penalty imposable under section 273(a) for the year 1977-78." The Revenue went up in appeal but could not persuade the Tribunal to sustain the penalty imposed by the Assessing Officer. The Tribunal dismissed the appeal and observed: "Major addition appears to have been made under section 41(1) on account of cessation of liability. It is correct that the assessee could not anticipate or foresee that any such addition would be made by the Assessing Officer under section 41(1). The assessee never wanted the liability as ceased inasmuch as in the assessee's favour the liability still subsisted. We, therefore, find that the Commissioner of Income-tax (Appeals) was correct in taking the view that the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Division Bench of the Delhi High Court held that burden was on the Revenue to prove that the estimate furnished by the assessee for the purpose of advance tax was false and till that burden is discharged, penalty under section 273(a) of the Act cannot be levied. A similar view has been expressed by the Gujarat High Court in the case of Sarabhai Chemicals Pvt. Ltd. v. CIT [2002] 257 ITR 355. We respectfully agree with the views expressed by the Delhi and the Gujarat High Courts and hold that in the absence of any cogent evidence having been adduced by the Revenue that the assessee had deliberately filed the estimate of income for the purpose of advance tax for the assessment years 1977-78 and 1978-79, the Assessing Officer was not justi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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