Advance tax estimate penalty fails where untruth to the assessee's knowledge is not proved and the explanation is accepted.

Penalty for furnishing a revised advance tax estimate as allegedly untrue requires proof that the estimate was false to the assessee's knowledge or belief. The penalty order failed to identify how the estimate was untrue or show application of mind to the statutory ingredients, relying only on assessed income. The assessee's explanation that the revised estimate was made before accounts were finalised and on an uncertain estimate of income was accepted. On that basis, the penalty under section 273(2)(aa) was held unjustified and deleted.

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Issues: Whether penalty under section 273(2)(aa) of the Income-tax Act, 1961 was sustainable for furnishing a revised estimate of advance tax alleged to be untrue, and whether the assessee's explanation excluded liability.

Analysis: The ingredients of the penalty provision require satisfaction that the revised estimate was untrue to the assessee's knowledge or belief. The penalty order proceeded merely on the basis of assessed income without showing in what manner the estimate was untrue to the assessee's knowledge or belief, and without demonstrating application of mind to the statutory requirements. On merits, the assessee's explanation that the revised estimate was made before finalisation of accounts and on an uncertain estimate of income was found acceptable.

Conclusion: The penalty was not justified and was deleted.

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