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TMI Blog1992 (2) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Rs. 11,68,162. Subsequently the said return was revised as the loss incurred by Electrical Instruments Manufacturing Company Ltd. (EIMC) division of the company for the year ended on 31st December 1979 was not deducted in the original return, as the order of amalgamation of the two companies, namely, Gujarat Machinery Manufacturers Ltd. ('the assessee') and EIMC, was passed subsequent to the date of filing of the original return. The company also paid income tax by way of advance tax, TDS and self-assessment tax under section 140A aggregating to Rs. 6,90,698 for assessment year 1980-81. This amount is refundable to the company on the basis of the revised return for assessment year 1980-81. Similarly for assessment years 1981-82 and 1982-83 the returns have been revised and for assessment year 1982-83 the tax payable as per the revised working comes to Rs. 6,74,821. The assessee, therefore, requested the assessing authority to adjust the refund for assessment year 1980-81 amounting to Rs. 6,90,698 against the tax payable as per the revised working of income tax of Rs. 6,74,921 for assessment year 1982-83 and requested for refund of the balance amount of Rs. 19,484. 2.1 The IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1980-81, showing total income at nil, after claiming carry forward in respect of unabsorbed business loss and depreciation of EIMC. Since the benefit of such carry forward of past losses under section 72A was made effective from assessment year 1980-81 and the assessee, prior to that, was of the belief that it may be granted from assessment year 1981-82 onwards, it also submitted a revised return for assessment year 1981-82 on 12th January, 1983 and submitted a revised working containing revised computation of income for assessment year 1982-83 along with aforesaid letter dated 1st January, 1983. This, according to the learned counsel, constituted a reasonable cause on the part of the assessee in entertaining a belief that its income for assessment year 1982-83 was not liable to any advance tax. 3.1 The other reason which gave such a belief to the assessee at the time when it was required to furnish the statement of advance tax was the claim made by the assessee for grant of deduction in respect of royalty payable to M/s Nikex Hungarian Trading Co. (NIKEX), the foreign collaborators, for the supply of technical know-how of the products manufactured by the assessee. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 273(1)(b) cannot be levied if the facts and material existing on records prove that there was a reasonable cause for not furnishing the statement of advance tax or an estimate in lieu of such statement of advance tax. 3.3 The learned counsel further submitted that interest charged under section 215 for this very year has been deleted in the quantum appeal by the CIT(Appeals). The department has not raised any ground of appeal against such deletion of interest under section 215 before the Tribunal. Thus the finding given by the CIT(Appeals) deleting interest under section 215 has been accepted by the department. This by itself sufficiently supports the assessee's contention that no penalty can be validly levied under section 273(1)(b). 3.4 The learned counsel further argued that the burden lies on the department to prove the absence of reasonable cause before levy of penalty under section 273(1)(b). The mere default of non-submission of statement of advance tax or an estimate in lieu thereof would not automatically justify the levy of penalty but it is incumbent on the assessing authority to prove that the assessee has without any reasonable cause failed to do so. The ITO has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 273(1)(b) cannot be sustained. The provisions of section 27(1)(b) as it existed prior to its amendment by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 w.e.f., 10-9-1986 provided that where any assessee has without reasonable cause failed to furnish a statement of advance tax payable by him in accordance with section 209A(1)(a), he may be liable for penalty under the said provision. The words "without reasonable cause" have been omitted by the aforesaid amendment made w.e.f., 10-9-1986. At the same time it have been provided by a new section 273B providing that no penalty shall be imposable for such a default if the assessee proves that there was reasonable cause for the said failure. The scope and meaning of these amendments have been explained in the Board's Circular No. 469, dated 23rd September, 1986. In para 12.4(b) of the said circular, appearing at page 37, it has been mentioned that under the existing provisions penalty is leviable if the above defaults are committed without reasonable cause. By omitting the words "without reasonable cause" from these provisions, it has been provided that the default by itself will attract penalty unless the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July, 1980 the assessee did not claim benefit of any amount of carry forward of loss of EIMC as per section 72A and it claimed the benefit of carry forward of such loss under section 72A only in assessment years 1981-82 and 1982-83. The matter relating to eligibility of the assessee under section 72A for claiming such carry forward of losses pursuant to the amalgamation scheme was finalised on 3rd September, 1982 i.e., much after the due date of 15th June, 1981. Some time after receiving the declaration under section 72A the assessee submitted revised return for assessment years 1980-81 and 1981-82 and also submitted a revised computation of total income for assessment year 1982-83 along with forwarding letter dated 1st January, 1983. In similar manner the belief formed by the assessee that in relation to its claim for grant of deduction in respect of royalty cannot be said to be not bona fide. The claim for such deduction was granted in assessment years 1976-77 to 1978-79. For the first time such a claim was rejected in assessment year 1979-80 vide assessment order dated 19th Sept., 1983. This also was much after the due date of 15th June, 1981. Such a bona fide belief formed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 215 in assessment year 1982-83 has been deleted by the CIT( Appeals) against which no further appeal has been preferred by the revenue. Since the matter relating to allowability of interest under section 214 in assessment year 1980-81 and the question relating to deletion of interest under section 215 in the year under consideration does not affect the leviability or non-leviability of penalty under section 273(1)(b), this question is not presently the subject-matter of our consideration. However, we have made these observations with a view to point out that if proper care would have been taken at the appropriate time when the assessee submitted revised return for assessment years 1980-81 and 1981-82 and revised computation of income for assessment year 1982-83, the revenue would not have been deprived of its lawful dues by way of payment of huge amount of interest under section 214 to the extent of Rs. 3,55,239 in assessment year 1980-81, which, perhaps could have been substantially reduced if the adjustment of tax would have been allowed in assessment year 1982-83, as desired by the assessee. The matter relating to chargeability of interest in assessment year 1982-83 has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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