1985 (9) TMI 118 - AT - Income Tax

Assessment Timing Key in Tax Penalty Appeals: Pre-assessment exempts from filing estimates; penalties for technical breaches questioned.

SMT. MAYURIKA M. SHETH. Versus THIRD INCOME TAX OFFICER.

SMT. MAYURIKA M. SHETH. Versus THIRD INCOME TAX OFFICER. - TTJ 026, 202, Issues:Assessment completion date and service date discrepancy in penalty imposition under s. 273(1)(b) of the Income Tax Act, applicability of s. 209A(1)(b) regarding filing estimates, interpretation of the term 'regularly assessed,' discretion in imposing penalties for statutory breaches.Analysis:The judgment pertains to appeals with identical grounds and similar facts, consolidated for convenience. The issue revolves around penalties imposed under s. 273(1)(b) of the Income Tax Act on assessees who failed to furnish estimates before the last date of instalment, despite being assessed before that date. The department argued that since the assessment orders were served after the due date, assessees were unaware of their regular assessment status. However, the assessees contended that being assessed before the due date made them 'regularly assessed,' thus exempting them from the obligation to file estimates under s. 209A(1)(b).The assessees' counsel highlighted that all assessees had filed their first returns for the relevant assessment year and had a single source of income from a trust. They believed assessments would conclude post hearings, which indeed happened before the due date, except for one case. The counsel cited the Bhaskaran case precedent, emphasizing that an assessment is deemed complete upon the officer signing the order, not upon service to the assessee. The Tribunal noted the absence of an obligation under s. 209A(1)(b) for assessees assessed before the last filing date, aligning with the decision in Smt. Tarulata Shyam & Ors. vs. CIT. The Tribunal construed that the obligation to file estimates applies from the first to the last day of the installment period, exempting regularly assessed assessees.Furthermore, the Tribunal invoked the Hindustan Steel Ltd. case, asserting that penalties should not be imposed solely due to technical breaches. The discretion to impose penalties hinges on a judicial evaluation of circumstances, especially in cases of bona fide beliefs or minor statutory violations. Consequently, the Tribunal allowed the appeals, emphasizing that even if the assessees were technically liable for estimate filings, penalties were unwarranted given the circumstances.