Penalty under section 273(b) fails where income falls below the taxable limit and no estimate was required.

Penalty under section 273(b) of the Income-tax Act could not survive where, after effect was given to the Tribunal's earlier direction, the assessee's income fell below the taxable limit and no tax remained payable. On that factual basis, there was no obligation to furnish an estimate under section 212(3), so the foundation for levy of penalty disappeared. The related interest levy under section 220(2) had also been cancelled on the same basis.

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Issues: Whether penalty under section 273(b) of the Income-tax Act, 1961 could be sustained when the assessee's income was found to be below the taxable limit and no tax was payable.

Analysis: The assessee's income, after the Tribunal's earlier direction was given effect to, fell below the taxable limit. On that factual basis, there was no obligation to submit an estimate under section 212(3) of the Income-tax Act, 1961, and the foundation for levy of penalty under section 273(b) disappeared. The related interest levy under section 220(2) had also been cancelled on the same basis.

Conclusion: The penalty could not be levied and the assessee was not liable to penalty under section 273(b) of the Income-tax Act, 1961.

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