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TMI Blog1980 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... advance-tax payable at 'Nil'. The assessee-company filed a revised estimate dt. 14th March, 1972 on 15th March, 1972 whereby it estimated its income subject to advance-tax at Rs. 2,00,000 and advance-tax payable thereon at Rs. 1,12,750. The amount of Rs. 1,12,750 was paid by the assessee. The return of income was filed on 31st Oct., 1972 declaring a total income of Rs. 4,45,433. The assessment was completed under s. 143(3) on 26th March, 1975 on a total income of Rs. 5,02,890. The ITO, under these circumstances, initiated penalty proceedings under s. 273(a) of the Act. 3. Resisting the ITO's action of initiating penalty proceedings for filing wrong estimate under s. 273(a), the assessee submitted four written explanations first on 17th Feb., 1977, second dt. 19th March, 1977, third dt. 13th Feb., 1978 and fourth dt. 20th May, 1978. Relevant portion of the explanation reads as under: "2. Estimate of income filed at Rs. 2 lakhs was based on following figures: Income from Unit Nos. 1, 2, 3 and Delhi Office + Rs. 4,50,000 Income from Unit No. 4 + Rs. 50,000 Loss from export wing and Unit 5 - Rs. 3,00,000 Net income estimated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit No. 4 at Rs.50,000 was the income from said Unit No. 4 as per profit and loss account, for the preceding year, which was Rs. 25,890. Keeping in view increase in sales and to be on safer side, the income from the said unit was taken at Rs. 50,000." The assessee further furnished before the ITO requisite details of monthwise sales in respect of the financial year ending 31st March, 1972 relevant to the assessment year under appeal and also filed similar details of the immediately preceding year. 4. At this stage, we like to record that the assessee's account is maintained on mercantile basis and the 'previous year' is the financial year. If only the ITO had properly appreciated the facts brought to his notice and which were kept by him in his focus in respect of trading activities of Unit No. 4, the cause of action for levying penalty would not have been there because regarding the difference in estimated and declared income the ITO after noting the following figures in his penalty order observed that the revised estimate was filed on 15th March, 1972 when hardly fifteen days were left for close of the books of the year and, therefore, there seems to be no justification w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition to make a fair estimate of its correct income. In other words, not finding a case that the assessee knew or had reason to believe that its estimate of advance-tax was untrue, the ITO projected that there was nothing to indicate that the assessee was not aware of its true income. Apparently, the ITO misread the section. 5. The CIT(A) in para 5 of his order has summarised the contention of the assessee raised before him as under: "(a) The ITO is wrong in considering the first estimate in as much as the penalty can be levied and has been levied under s. 273(a) on the basis of last estimate and not on the basis of the first estimate. The ITO's mind has been influenced by this irrelevant factor and his order is thus vitiated. (b) In penalty proceedings under s. 273(a) the onus to prove that the assessee has furnished an estimate of advance-tax payable by him which he knew or had reasons to believe to be untrue, is on the Department and in the present case this onus has not been discharged by the ITO." The CIT(A) in paras 6 and 7 of his order has referred to his earlier order dt. 3rd Oct., 1978 passed in the assessee's own case by which he had deleted similar penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 25,890. These figures are available in the ITO's record. 8. (b) Regarding the fabrication receipts, referred to in the ITO's order. Shri Arora, furnished before me the following details: . Asst. years . 1971-72 1972-73 Upto 28th Feb., 2,58,642.79 4,00,244.87 March, 80,040.60 97,641.52 . 3,38,683.39 4,97,886.39 The final position of sales and fabrication receipts taken together upto the end of Feb. of the relevant f.y. is thus as under: . Asst. years . 1971-72 1972-73 Sales 22,58,242 31,80,212 Fabrication receipts 2,58,643 4,00,245 . 25,16,885 35,80,457 It is next submitted that as this year the sales and fabrication receipts upto 28th of Feb., were more than the sales and fabrication receipts of the corresponding period of the last year, the assessee estimated its net income at a figure higher than that reflected by the books for the last year. On proportionate basis, this comes to Rs. 36,830 (Rs. 25,890 x 35,80,457) 25,15,885 To be on the safe side, this was taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l used by it in arriving at its finding. Such finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. It would thus be seen that the issue involved in that case was whether a question of law arises or not when the Court of fact whose decision on a question of fact is final has taken into consideration certain irrelevant material also and Their Lordships of the Supreme Court held that a question of law as to whether the Tribunal's finding is, under such circumstances, not vitiated, arises. That was a case of a findings of fact by a Court (Tribunal) whose decision on a question of fact is final. The decision of the ITO is not final either in law or in fact and, in my opinion, therefore, a fresh finding of fact can be given after eliminating the irrelevant material employed by the ITO. This disposes of Shri Arora's first submission mentioned above, and the first two reasons given by the ITO for imposing the penalty, as mentioned above at pages 3 and 4. 10. Regarding the third contention of Shri Arora, viz., that in penalty proceedings under s. 273(a) the onus lies on the Department, it may be stated that the Punjab and Haryana High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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