9911796707
TMI Blog1983 (8) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... 15th March, 1975. The assessee did not file any such estimate on or before the date prescribed under the statute. Subsequently, the assessed filed a return on 11th Dec., 1975 declaring an income of Rs. 2,46,500. The assessment was completed on a total income of Rs. 2,48,168. The ITO started penalty proceedings under s. 273(b) of the Act, and asked the assessee to explain as to why it should not be penalised. The assessee replied, as per its letter dt. 6th April, 1979, as below: "With reference to the same we have to inform you that this is the first year of working of our clients, since its incorporation. The business during the assessment year was buying and selling the drugs. The stock of the drugs dealt by our clients was taken on the basis of physical verification on 31st March, 1975. Therefore, till the stock is taken properly tabulated and valued our clients was not in a position to know what will be the net income for the income-tax purpose. This process consumed considerable time and, therefore, it was not possible for our clients to submit the advance tax estimate on or before 15th March, 1975. Our client has not idea and was under a bona fide belief that any advance ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le the estimate and to pay the advance tax in the face of such huge profits earned by it. He also observed that the decision in the case of Co-operative Cane Development was different because in that case, the Co-operative Society had a bona fide belief that its income was exempt from tax. Hence, the CIT(A) agreed with the ITO that the assessee was liable to penalty under s. 273(b) of the Act. He then observed that the penalty levied by the ITO being the minimum did not call for any interference. Hence, he dismissed the appeal. 5. Shri Y.P. Trivedi, the ld. representative for the assessee, urged before us that the penalty imposed was not justified. He stated that this was the first year of business. The only-male share holder, who was also the Managing Director of the assessee company, was professional man being a Doctor in Chemistry, i.e., a Technocrat. His point was that the Managing Director was not aware of the complexities of the IT Law. Further, he pointed out that the audit of the company was completed in September, 1975, and the return was filed on 11th Dec., 1975. He stated that Dr. Abraham Pattani was paying advance tax in respect of his sole proprietary concern only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled. 6. Shri G. Krishnan, the ld. representative for the Department, on the other hand, supported the orders of the Revenue authorities. He stated that the case of Southern Publications Pvt. Ltd. is distinguishable on facts, because, in that case, the assessee did file an estimate though delayed by six days. Further, the penalty order passed in that case was not at all speaking and too cryptic. Similarly, he, urged that the remarks of their Lordships in the case of Bipanlal Kuthiala have to be understood in the context of that case. That was a case of penalty under s. 273(a) of the Act. The assessee did file an estimate which was considered to be underestimate by the ITO. Yet, the ITO did not ask the assessee the basis on which he filed the estimate. The ITO merely assumed that the assessee committed the default envisaged under s. 273(a) of the Act, and did nothing to discharge the burden which lay on him to show that the estimate filed by the assessee was underestimated without reasonable cause. Hence, the High Court upheld the penalty in that case. 7. Shri G. Krishnan pointed out that in the case before us, the ITO has taken pains to establish that the assessee failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. The case of Co-operative Cane Development Union was a case of a Co-operative Society which was found to have entertained an honest belief that its income was exempt from tax. No such thing can be said regarding the assessee before us. In the case of Southern Publications Pvt. Ltd., the assessee did file an estimate, though six days late. The penalty order passed by the ITO was too cryptic. In fact, the ITO assumed that failure to file an estimate is enough to levy the penalty. He did not do anything more. Hence, their Lordships of the Madras High Court quashed the penalty under their writ jurisdiction. In the case before us, we cannot say that the assessee has filed the estimate a few days after the due date, or that the penalty order passed by the ITO was cryptic or non-speaking. On the contrary, the ITO, has, in our opinion, written a well-reasoned order. The case of Bipanlal Kuthiala is also distinguishable. That was a case under s. 273(a) of the Act. Further, in that case, the ITO did not even let the assessee know the specific charges against him. Nor did the ITO ask the assessee the basis on which the assessee prepared his estimate. It was under those circumstances that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department. We do not find any evidence to support such a statement. There is no whisper in this regard in the assessee's reply dt. 6th April, 1979. The assessee's reply merely says that it had no idea that it had to pay advance tax. This reply does not say that the assessee was waiting for the receipt of a demand notice from the Department, in order to pay the advance-tax. We are, therefore, not impressed by this argument given at this late stage. Thus we come to the conclusion that the ITO has discharged whatever burden that lay on him in order to show that the assessee in the case before us squarely came within the four corners of the offence envisaged under s. 273(b) of the Act. Hence, we agree with the Revenue authorities that the assessee was liable to penalty under s. 273(b) of the Act. 11. Coming to the alternative argument of the assessee, we find some force therein. Considering the nature and extent of the assessee's business, we feel that the ends of justice will be met if the quantum of penalty is reduced to the minimum imposable under the law, or Rs. 15,000 whichever is higher. We, direct that the quantum of penalty be reduced accordingly. 12. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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