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TMI Blog1986 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... -1970 and 15-3-1971. In compliance therewith, the assessee paid two instalments. On 17-2-1971, the order under section 210 of the Act was revised under section 210(3) purportedly on the basis of tax paid under section 140A of the Act for the assessment year 1970-71. The ITO also mentioned that according to revised order, the total advance tax payable was at Rs. 9,22,366 and after deducting tax already paid, i.e., Rs. 1,23,362, the balance tax payable was at Rs. 7,99,004. The assessee was required to pay this amount by 15-3-1971. 3. The ITO mentioned that the assessee by its letter dated 1-3-1971 informed the ITO that the amended order under section 210 could be passed on the basis of the tax paid under section 140A and not on the basis of tax payable under section 140A. It was also submitted that the tax under section 140A for the assessment year 1970-71 was not paid before 17-2-1971. In the circumstances, it was contended that the order under section 210 was bad in law and the demand notice was invalid. On 19-3-1971, the assessee addressed in another letter to the ITO pointed out to the validity of the original order under section 210 in the background of the relevant provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 210 dated 3-8-1970 and, hence, if there was any irregularity in the order, the assessee waived the same on its own and acted in compliance with the order. He, therefore, was of the view that the contention of the assessee for non-filing of estimate of advance tax was not tenable. He was, therefore, satisfied that the assessee had failed to furnish an estimate of advance tax under section 212(3A) without any reasonable cause. He directed that Rs. 1 lakhs should be paid by the assessee by way of penalty under section 273(c). 8. The assessee took up the matter before the AAC at the first instance reiterating the similar contentions. The assessee placed reliance on the decision of the Hon'ble Allahabad High Court in the case of Chitra Cinema v. ITO [1968] 68 ITR 877. The AAC on the reasons recorded by him cancelled the penalty. Thereafter, the revenue took up the matter before the Tribunal. The Tribunal amongst other things observed that basic requirement of section 209(1) (a) was satisfied and as such, the order under section 210 could not be held to be bad in law and having regard to the very high income returned by the assessee in this year, the Tribunal observed that the oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate of advance tax. The assessee also relied on the observation of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26. The assessee submitted that as there being no validity order under section 210(1) or section 210(3), it had no obligation to file estimate under section 212(3A) and this point did involve a controversial issue and the Tribunal admitted that there was a controversy when it referred to question under section 256(1) of the Act as mentioned earlier. It is, therefore, argued that the assessee cannot be said to have taken a frivolous contention merely for the purpose of avoiding the liability to pay advance tax. It was argued that the assessee entertained bona fide belief that it was not liable to file the estimate under section 212(3A). The assessee placed reliance on the decision in Y. Narayana Chetty v. ITO [1959] 35 ITR 388 (SC), Chitra Cinema's case, Addl. CIT v. I. M. Patel Co. [1977] 107 ITR 214 (Guj.) (FB) and Addl. CIT v. Ranjitsinhji Oil Mills (P.) Ltd. [1976] 103 ITR 405 (Guj.). 11. The Commissioner (Appeals) considered the submission raised by the assessee from various angles. He pointed out that the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etters and this only would have given credence to the assessee's belief that it was not to comply with those notices. It was also noted that it was an important aspect of this case that the assessee did not intend to take unfair advantage of the two bad notices under section 210 but contemporaneously wrote the letters to the ITO clarifying the stand. The Commissioner (Appeals) observed that if the ITO made a mistake in issuing a notice under section 210 and of the assessee honestly held a belief that such notice was bad and, accordingly, which will not make him liable for filing enhanced estimate under section 212(3A) and also in the absence of the ITO to reply, then what the assessee was doing, was only acting in a bona fide manner. The Commissioner (Appeals) pointed out that if the assessee had not written these two letters and had kept the belief confined to itself, then it was for the assessee to show that such belief existed. He pointed out that in the present case the assessee not only entertained such belief but intimated such belief to the ITO which can be said to be in good faith. He, therefore, noted that it cannot be said that the belief entertained by the assessee in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther that the assessee by its own conduct did not show that there was such bona fide belief inasmuch as the assessee paid the instalments as demanded and so there was no misapprehension of the law by the assessee, as alleged. It is argued that if the assessee had such doubt, then how payments were made. It is pointed out that the second notice referred to earlier was not acted upon. It is argued that in penalty order itself basic facts of the case have been brought out which would show beyond doubt that the assessee had no reasonable cause for failure to file estimate under section 212(3A) in the circumstances of the case. It is submitted, therefore, that the order of the Commissioner (Appeals) may be reversed and that of the ITO may be restored. 16. On behalf of the assessee the learned counsel, on the other hand, supports the order of the Commissioner (Appeals). The provision of the section 212(3A) were emphasised. The points mentioned by the assessee in the letters referred to earlier are highlighted by the assessee's learned counsel at the time of hearing. It is argued that the assessee had bona fide belief in the circumstances of the case that it had no obligation to file an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in those letters which were noted by the authorities below in their respective orders. The contention of the assessee, on the other hand, was that even at that very point of time, the assessee pointed out such irregularity or invalidity of orders of demand under section 210 and that was why the assessee entertained the bona fide belief that it had no obligation to file an estimate as mentioned above although a gesture of goodwill, the assessee paid the third installment within time. The contention of the assessee that by paying the installment would not by itself validate an invalid notice and the ITO could not have taken advantage of the payment or honesty of the assessee. 18. It is true that penalty cannot be imposed for a technical or venial breach of law as contended. But, here in the instant case, it appears that the penalty had not been imposed for any technical or venial breach of law. On the contrary, it was the assessee who contends that since the notice under section 210 was not valid, the assessee had no obligation to file an estimate under section 212(3A) while at the same time the assessee did make payments of advance tax and that too, within the stipulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. True, the assessee paid the instalments of advance tax and on that fact alone, it cannot be said that by such payments the invalid notice under section 210 became valid or it cannot be said that the assessee has waived the irregularity, which notice was found to be valid factually even by the Tribunal as mentioned above. It cannot also be said that since the notice was invalid according to the assessee, the payments by the assessee also were invalid, which again is not correct as credit for such payments were already given in the computation of the tax. 20. It may be mentioned that before the Commissioner (Appeals), the assessee contended that the expression 'without reasonable cause' appears in section 271(1)(a), 273(c) and 276(b). The stand taken by the assessee that there can be no dispute that the prosecution was launched for offence under section 276(b), mental element would be relevant and the expression 'without reasonable cause' should also have the same meaning and while considering the provision of section 273(c) and the mental element cannot be ruled out. In this connection it would be useful to refer to the decision of the Hon'ble Kerala High Court of the Full Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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