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TMI Blog1985 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... found that in the assessment year, the revenue account of the assessee showed an income of Rs. 26,39,382. The Income-tax Officer found that the assessee had not complied with the provisions of section 212(3) of the Act and no advance tax was paid as required under that section. On completion of the assessment, the Income-tax Officer proceeded under section 273 of the Act for default in complying with the provisions of section 212(3) of the Act. As there was no reply to the show-cause notice, the Income-tax Officer held that the default was without any reasonable cause and he, therefore, imposed a penalty of Rs. 94,892. For the assessment year 1964-65, the revenue account of the assessee showed an income of Rs. 46,25,693 and the assessment was made on total income of Rs. 19,81,420. The Income-tax Officer, for similar reasons, imposed a penalty of Rs. 1,13,550 on the assessee for the assessment year 1964-65. The penalty orders of the Income-tax Officer have been annexed and marked as annexures A and B forming part of the statement of the case. The assessee appealed before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessee-Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of several buses. The Appellate Assistant Commissioner found that as against the claim of Rs. 24,54,120, ultimately allowance of only Rs. 9,08,550 was allowed in the assessment year 1961-62. The amount of interest had not been disclosed in the assessment years 1960-61 to 1962-63. On the aforesaid facts, the Appellate Assistant Commissioner came to the conclusion that the assessee had originally inflated its losses by making excessive claims of depreciation, and did not disclose the income from interest which ran into several lakhs of rupees each year. The Appellate Assistant Commissioner also found that the assessee had been found guilty of concealment of interest and penalty under section 271(1)(c) was levied. Thus, the Appellate Assistant Commissioner held that the assessee should have filed the estimate as required under section 212(3) of the Act. He, therefore, confirmed the penalty. As regards the assessment year 1964-65, the Appellate Assistant Commissioner found that the assessee had shown brought forward losses of the earlier years to the extent of Rs. 91,77,461, but had not shown the interest income in the return to the extent of Rs. 4,67,754. The Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it appears that the advice given to it regarding the claim of depreciation was not correct. However, the Tribunal held that there was no mens rea involved in the action of the Corporation. Similar finding applied to the claim of depreciation for the whole year whereas it was allowable only for a part of the year. Regarding the interest, the Tribunal found that it had not actually been received by the Corporation till finalisation of that account and, therefore, though it was found to be taxable, there was reason for its not being shown in the account. The Tribunal further found force in the argument of the assessee that even if the amount of interest was considered, it would have been wiped out by the earlier years' claim of losses. The Tribunal, therefore, held that the assessee Corporation had taken into account the loss returns filed for the earlier years and the depreciation which was allowed on the basis of the balance-sheet and there was nothing to show that the earlier claims were deliberately exaggerated by the assessee. The Tribunal held that the assessee had bona fide belief that no tax would be payable by the assessee-Corporation for these two years and, therefore, it a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 965. It is also an admitted fact that the assessee had not furnished any estimate of advance tax payable in accordance with the provisions of section 212(3) of the Act during the financial year 1962-63 and no advance tax was paid on the basis of such statement made during the period for the assessment year 1963-64. He has also pointed out at pages 4 and 5 of the paper book that the original cost of the vehicles was shown at Rs. 1,53,72,599 but the Rajya Transport, Government of Bihar, had shown a depreciation reserve to the extent of Rs. 1,12,69,253. It is the admitted case of both the parties that no depreciation was allowable to the Rajya Transport, Government of Bihar. However, the balance-sheet showed the original cost of the vehicles and also the depreciation reserve as taken over by the assessee from the Rajya Transport, Government of Bihar. The Appellate Assistant Commissioner has pointed out that if depreciation reserve is deducted from the original cost of the vehicles, then the net cost of the vehicles to the Corporation on the date of take over would be the difference between these two figures, namely, Rs. 41,03,346. The appellant claimed depreciation on the original cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, has asserted that in the assessment year 1961-62, the Income-tax Officer rectified the assessment but the assessee had moved in the matter. It cannot be doubted that in the assessment year 1960-61, the assessment remained which means that the loss of Ps. 34,53,366 stands as has been shown at page 6 of the paper book by the Appellate Assistant Commissioner. If this loss is carried forward, then the assessee's claim on that basis may be accepted in the assessment year 1961-62. However, the fact remains that for the first time the assessment was made on February 16, 1965, and the assessee till that date was following the same method of accounting not showing interest income and claiming depreciation according to the original cost of the vehicles. The Tribunal also held that the interest was not received by the assessee till the end of the accounting period and the assessee bona fide believed that the interest income is not to be shown in the return. Even if interest income should have been shown, there would have been loss according to the assessee. Till the assessment is made, the assessee cannot find out as to what system should be followed. When the assessment was made on Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble cause for non-filing of the estimate, specially when the assessee had not availed of the opportunity of extending the date for submission of the estimate given by the proviso to sub-section (3) of section 212 of the Act and the imposition of penalty was valid. In this case, it was held that there was no reasonable cause. Mr. B. P. Rajgarhia has also relied on the case of H. H. Maharani Sharmishthabai Holkar v. Addl. CIT [1981] 129 ITR 13 (MP). In this case, the Tribunal held that it was for the assessee to show reasonable cause and the element of mens rea or guilty intent was not required to be taken into consideration while imposing penalty under section 273(c) and in those circumstances, the Madhya Pradesh High Court held, affirming the decision of the Tribunal, that the levy of penalty on the assessee was valid. Mr. K. N. Jain, the learned advocate for the assessee, has relied on the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, where the Supreme Court has held that no penalty can be levied where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In this decision, it was also held t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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