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TMI Blog1984 (4) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... een called upon to make payment of advance tax of Rs. 12,43,850. The assessee in reply to the second notice demanding advance tax of Rs. 30,25,977 filed an estimate of Rs. 13,23,001 on an estimated total income of Rs. 21 lakhs. The assessee having felt that he had not made a correct estimate made payment of Rs. 10 lakhs as advance tax on 8-3-1976. The IAC (Assessment) completed the assessment on 30-11-1978 on a total income of Rs. 58,35,456 which after appeal was raised to Rs. 58,76,310. On these facts, the IAC (Assessment) was of the view that the assessee had filed an estimate which he knew or had reason to believe to be untrue. Accordingly. he initiated penalty proceedings under section 273(a) for the year in appeal. Although twice he called upon the assessee to show cause, it is admitted that the assessee failed to give any reply or explanation. This led the IAC (Assessment) to hold that the assessee was liable under section 273(a) for filing an underestimate. He observed, silence on the part of the assessee goes to reveal that assessee has nothing to say for the default. From the facts narrated above, it is clear that the assessee had committed a default by furnishing false es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of this payment would show that the assessee had been genuinely misled by the erroneous estimate of income made by the Chief Accountant and, therefore, sought to make the amends by making the payment of additional advance tax before the financial year had expired. The assessee could not be held on these facts exposed to any liability for filing underestimate of income for advance tax payment consciously. Even if it is held that the assessee had filed an underestimate, the assessee had explained beyond doubt that this had been done under the stress of an error committed by the Chief Accountant whose affidavit was produced in which he had testified to this effect. The assessee-company after the error was noticed sought to make amends by paying the additional payment of Rs. 10 lakhs. The Commissioner (Appeals) considered these pleas but he could not be persuaded that the assessee could be held not liable under section 273(a) for filing an underestimate consciously. Accordingly, as indicated above, he sustained the levy of penalty imposed by the IAC. He observed, 'As stated earlier as against the advance tax demand of Rs. 27,93,210 had become finally payable in this case the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany did its best to make amends by undertaking to pay additional tax once it was apprised of the error in the estimate of income filed by it on 15-9-1975. Accordingly, he questioned the propriety of maintaining a part of the penalty levied by the IAC (Assessment) under section 273(a). On the other hand, the departmental representative took the stand that a consideration of the pleas raised before the Commissioner (Appeals) was unwarranted and unjustified. The Commissioner (Appeals), no doubt, had considered those pleas and recorded his finding but it was not called for in an appeal against the order of penalty levied by the IAC (Assessment). It was the satisfaction of the ITO or of the IAC (Assessment) in this case, which will provide the basis for the penalty to be imposed under section 273(a). It is the satisfaction of the assessing officer which is mandatory and called for to become the basis of the order of penalty under section 273(a). It is this satisfaction of either of them, the ITO or the IAC (Assessment), which is required to support an order of penalty levied by them. It is not the satisfaction of the appellate authorities about the default which will sustain the levy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g officer in reply to the show-cause notices, he cannot make amends by producing them before the appellate authorities for their consideration. As we have already indicated, it is not the satisfaction of the appellate authorities which can form the basis of a levy of a penalty under section 273(a). Therefore, we uphold the contention of the revenue that the Commissioner was not called upon to consider the pleas which the assessee had put forth before him and which he had withheld from the consideration of the assessing officer, the ITO or the IAC (Assessment), whoever he may be who had initiated the penalty proceedings. Therefore, we cannot find any justification for our consideration either on the ground that those pleas put forth by the learned counsel for the assessee had not been properly considered by the Commissioner (Appeals). We, therefore, reject the plea of the assessee for consideration of pleas which had been considered by the Commissioner (Appeals) but which had not been put forth before the IAC (Assessment). We are, therefore, on the facts and in the circumstances of the case, left with no alternative but to consider the finding of the IAC (Assessment) on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee to show that he did not know that the estimate which he filed was untrue. It is for the assessing officer, the ITO or the IAC to bring on record the material to show that the assessee had filed the erroneous estimate which he knew to be untrue or had reason to believe to be untrue. A perusal of the finding of the IAC does not show that he looked at the matter from this aspect at all. In his consideration, the wide gap between the tax found due on regular assessment and that payable by him under the estimate filed by him on 15-9-1975 was enough to show that not only the estimate was erroneous but that he also knew or had reason to believe to be untrue. We are unable to appreciate the approach of the IAC in this matter. We cannot proceed on the basis of the presumption that when the estimate was filed by the assessee, he knew that it was an underestimate. As we have overruled the plea of the assessee based on the affidavit of the Chief Accountant regarding his oversight and his consideration flowing from the debit note of Rs. 23,63,448 received from Punjab Concast Steel Ltd., on the ground that these had not been put forth before the IAC, we cannot impute the knowledge and cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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