TaxTMI 
TaxTMI 
2013 (3) TMI 72
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....re given by the Inspecting Assistant Commissioner of Income Tax in his order to Assessing Authority to take such proceedings in the present case ? (B) Whether having regard to the contents of the two letters dated 1.12.1978 and 7.12.1978 the finding of the Income Tax Appellate Tribunal that the appellant has not been able to specify the reason for filing the wrong estimate and also to specify the reason as to why the appellant considered the depreciation and investment allowance on the machinery which was yet to be installed for computing its income liable to advance tax is not perverse and vitiated in law ? (C) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally correct in not recording independent finding and considering various material on record with respect to the reasonableness of the appellant for filing the estimate of income liable to advance tax ?" 2. Briefly stated, the facts giving rise to the present appeal are as follows:- 3. The appellant is a public limited company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacture and sale of synthetic fibers,....
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....ty had not proposed initiation of penalty proceeding under Section 273(2)(a) in the draft assessment order, he cannot initiate penalty proceeding thereafter. On merits, it was submitted that the burden of proof that the estimate of advance tax filed by the appellant was untrue to the knowledge of the appellant, lay on the Department and as there is no material on record to hold that the estimate filed by it was untrue, penalty proceeding cannot be legally initiated. The estimate of advance tax filed on 14.12.1978 was justified on the basis of the reports, dated 1.12.1978 and 7.12.1978, received from the Project Department, in which it had been stated that certain machineries which had been purchased, would be installed before the close of the accounting year, entitling the appellant to claim depreciation etc. on their value. A plea was also raised that merely because the returned income shown by the appellant was higher than the income shown by the appellant, it could not be automatically inferred that the estimate filed was untrue to the knowledge or belief of the appellant. The Assistant Commissioner of Income Tax, Central Circle, XVIII, New Delhi, who had then become the Assessi....
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....e relied upon a decision of the Apex Court in the case of Ananatharam Veerasinghaiah & Co. v. Commissioner of Income Tax, A.P., (1980) 123 ITR 457. 10. According to him, the estimated income may or may not be the same as that of the returned income shown by the assessee and the very word "estimate" implies the concept of presumption and it may never be accurate. In this view of the matter, he submitted that the Tribunal was not justified in upholding the order of the Commissioner of Income Tax (Appeals) that the appellant knew that the estimate filed by it was untrue. In support of his aforesaid plea, he has relied upon a decision of the Bombay High Court in the case of Hind Products Pvt. Ltd. v. Commissioner of Income Tax, Bombay City - 1, (1980) 121 ITR 903 and of the Calcutta High Court in the case of Commissioner of Income Tax v. Birla Cotton Spinning & Weaving Mills Ltd., (1986) 157 ITR 516. 11. Relying upon a decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Ahmadabad vs. Sarabhai Holdings Pvt. Ltd. reported in (2008) 307 ITR 89 he submitted that in view of the specific language of Section 273(2)(a) of the Act there has to be a satisfaction....
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....2012) 349 ITR 692 wherein the Hon'ble Supreme Court has held that the recitation in the assessment order by the Assessing Authority directing institution of penalty proceedings is not obligatory and penal proceedings could be initiated for such default (levy of interest under Section 234B or Section 234C) without specific direction from the Assessing Officer. 14. He has further submitted that the letter written by the appellant that the machineries to the extent of Rs.9 crores would be commissioned before December, 1978, is only to give a colour and was not bona fide as it had come on record that even part of the machineries had not been received by that time and the question of its installation or being put to use before the end of the accounting period, did not arise. The appellant had deliberately filed a wrong estimate of advance tax and the penalty has, therefore, rightly been levied. 15. Relying upon a decision of the Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Testile Processors reported in (2008) 306 ITR 277 he submitted that in fiscal statute for imposition of penalty it is not necessary that there should be mens rea on the part of the assessee....
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....by an assessee". Thus, the submission that as there was no proposal to initiate penalty proceeding under Section 273(2) of the Act in the draft order, the Assessing Officer could not have initiated the proceeding for imposition of penalty while passing the final assessment order has no legal basis and cannot be accepted. 18. In the case of Maharaja Exhibitors (supra), the Gujarat High Court has held that the object of Section 144B of the Act is that the assessee should get an opportunity to represent his case before the Revenue in the event of substantial change being made in his liability. However, after holding so, it had gone further and held that had the assessee known about the direction for issuance of a show cause notice for imposition of penalty, the assessee could have made a representation and could have stated as to why even such a show cause notice should not be issued and, in fact, the assessee was deprived of this opportunity as the said facts were not incorporated in the draft order which was approved by the Inspecting Assistant Commissioner. The object is to reduce litigation and to give an opportunity to the assessee to represent his case before the final assess....
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....ed Rs.1.5 crores only. The undisputed excise duty of Rs.11.86 crores was held to be not correct. However, the assessment was revised on 14.12.1978 wherein the income was estimated at Rs.3,83,00,000/- on which the tax payable came to Rs.2,21,18,000/- which was paid on 15.12.1978. Against the estimated income of Rs.3,83,00,000/-, the assessee had returned the income of Rs.7,74,88,133/- which was assessed at Rs.11,32,77,699/-. It has come on record in the order of the Commissioner of Income Tax (Appeals) that the filing of estimate on 14.6.1978 as nil income was on account of the depreciation in investment allowance of acrylic and cement unit - II Division in the expectation regarding installation and functioning of certain additions to plant and machinery which calculation went wrong. However, from the estimated capitalisation of machinery worth Rs.15 crores of acrylic unit machinery worth Rs.10 crores was installed and functioned and machinery worth Rs.2 crores were not even received during the year under consideration and machinery worth Rs.3 crores were installed much later. No explanation was forthcoming except the internal report of the Project Head. The Commissioner of In....
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....ind that the Assessing Officer was satisfied that the advance tax furnished by the assessee was untrue and the appellant also knew or had reason to believe the same to be untrue from the narration of the facts stated by him the penalty order. The provision of Section 273(2)(a) is attracted where an assessee furnishes estimate of advance tax payable by him which he knew or has reason to believe to be untrue. A thing which is in the knowledge or belief of an assessee, has to be proved by the assessee himself and not by the Revenue authorities. Thus, no benefit can be derived by the appellant from the aforesaid decision of the Hon'ble Supreme Court in the case of Sarabhai Holdings Pvt. Ltd. (supra). 24.There cannot be any quarrel with the principles laid down by the Bombay High Court in the case of Hind Products Pvt. Ltd. (supra) and of the Calcutta High Court in the case of Birla Cotton Spinning & Weaving Mills Ltd. (supra) wherein it has been held that the very word estimate implies presumptions and not accuracy and merely because at the end of the year an assessee is shown to have earned an income which is more than that shown in the estimate. That fact alone by itself will n....