1995 (5) TMI 71

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....see-firm filed estimate of advance tax declaring current income at Rs. 2,25,000, on which tax payable worked out to Rs. 45,000, which was paid. The return declaring income at Rs. 2,25,107 was filed for the asst. yr. 1985-86 but the assessment was completed on total income of Rs. 2,87,901. The Assessing Officer initiated penalty proceedings. 3. In response to show-cause notice, it was contended before the Assessing Officer that the difference between the current income estimated by the assessee for the purposes of advance tax estimate and the income assessed arose on account of certain disallowances which could not be predicted at the time of filing the estimate. Hence, the penalty is not exigible. The Assessing Officer did not accept the....

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....assessee in appeal. According to Shri Jain, non-filing of appeal does not necessarily lead to the conclusion that the assessee had not estimated its current income correctly. The assessee has maintained its account on mercantile basis and, therefore, it was necessary for it to provide for liability of the year of account. During the course of assessment proceedings, the assessee had furnished explanation in respect of provisions made under different heads of account and it has not been found by the Assessing Officer that such provisions were not made bona fide. He vehemently argued that the very fact that the Assessing Officer has allowed the provisions to the extent of Rs. 38,000 goes to suggest that the assessee's claim was not bogus. Acc....

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....anticipatory expenses relevant to the succeeding assessment year. He further submitted that provision for freight was also made without any basis, as the assessee had provided the expenses on estimate only. Moreover, it was found that the provision for stationery and printing was, in fact, not made on the basis of bills received, as contended by the assessee. Shri Vijayvargiya argued that from the very nature of the provisions made by the assessee under the above three heads, the assessee could very well foresee that such provisions would not be allowed in assessment. Therefore, the assessee was under obligation to file higher estimate of advance tax and failure to do so has invited penalty, which has been confirmed in first appeal and dese....