Advance-tax estimate penalty fails where estimate was bona fide on filing date and later assessment alone did not prove falsity

Penalty for filing an advance-tax estimate below the eventual assessment was held unsustainable where the estimate was based on the material available on the filing date and reflected a bona fide view of current income. The later higher assessment did not, by itself, make the original estimate false for section 273(a) purposes. Any failure to furnish a revised estimate was treated as a separate matter under a distinct provision and could not support the impugned penalty. The penalty was therefore set aside.

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Issues: Whether the penalty imposed under section 273(a) of the Income-tax Act, 1961, for filing an estimate of advance tax below the eventual assessed tax was sustainable where the estimate was based on the material available on the date of filing.

Analysis: The estimate of advance tax had to be judged with reference to the assessee's position and state of mind on the date it was furnished. On the facts, the assessee had filed the estimate on the basis of the then available material and could entertain a bona fide belief as to its current income. The later higher assessment did not, by itself, render the earlier estimate false for the purpose of penalty. The failure to furnish a revised estimate, if any, was a distinct matter for which separate provision existed and was not the basis of the penalty imposed.

Conclusion: The penalty under section 273(a) was not justified and was set aside.

Ratio Decidendi: An advance-tax estimate is to be tested by the assessee's bona fide belief and the material available on the date of filing, and a later higher assessment does not, without more, attract penalty for underestimation under section 273(a).

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