TaxTMI 
TaxTMI 
2001 (4) TMI 54
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.... Whether, in the facts and circumstances of the case, the order annexure P-3 sustaining the imposition 6f penalty when the Revenue had failed to discharge the onus of proof as imposed on it by law, is legally sustainable ? (v) Whether, in the facts and circumstances of the case, the confirmation of the imposition of penalty is legally sustainable in spite of the specific mandate provided by the court in [1980] 124 ITR 653 ? (vi) Whether, in the facts and circumstances of the case, the sustaining of the imposition of penalty on the estimate of advance tax filed by the assessee while not following the mandatory provisions of section 174(1) of the Income-tax Act, 1961, is legally sustainable ?" The facts necessary for deciding the appeal are that the appellant-assessee initially filed an estimate of advance tax on june 11, 1981, showing a total income of Rs. 2,17,820. On December 15, 1981, it filed a revised estimate in Form No. 29 showing an income of Rs. 44,00,000 and paid tax amounting to Rs. 27,06,000. The return of income was filed on june 29, 1982, in which the assessee declared a total income of Rs. 58,26,380. The assessment was completed under section 154 of the Act on April....
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....bsp; 87,395 --------- Total tax payable 35,83,223 ---------  ....
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....highly probable that the appellant knew or had reason to believe that the estimate of advance tax filed by it on December 15, 1981, was untrue. Penalty under section 273(2)(aa) is, therefore, held to be exigible in the facts and circumstances of the instant case. Regarding calculation of penalty and the appellant's contention that the penalty should be imposed at the minimum rate after excluding the amount of Rs. 31,29,819 from income assessed we find that the calculation of penalty is statutorily prescribed and has to be adhered to. Once penalty is held to be exigible, it has to be calculated with reference to the assessed tax, and no discretion is given to any authority to alter the figure of assessed tax by excluding there form the tax payable on items of income, the taxability of which could not be envisaged by an assessee at the time of filing the estimate of advance tax. If such items of income are found included in the assessed income then it could, at best, be a mitigating circumstance, keeping in view which, the minimum penalty may be imposed, as in the matter of calculation of penalty, the only discretion vested in the assessing/appellate authorities is to impose penalty ....
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....tion of the Commissioner of Income-tax (Appeals) in confirming the penalty under section 273(2)(aa) on the assessee." Shri A. K. Mittal referred to the provisions of sections 28(iii)(a) of the Act to show that the profits on import entitlements were made exigible with retrospective effect from April 1, 1962, by the Finance Act, 1990, and argued that the non-inclusion of Rs. 31,29,819 representing the profits on import entitlements cannot be treated as an act of deliberately furnishing untrue estimate of advance tax so as to attract penalty under section 273(2)(aa) of the Act. Learned counsel then submitted that the view taken by the Allahabad High Court in Swadeshi Cotton Mills Co. Ltd. v. CIT [1989] 180 ITR 651, that the amount of profits on import entitlements is exigible as income from business was the subject-matter of S. L. P. No. 1049 of 1980 in which notice had been issued by the Supreme Court and, therefore, the petitioner had not included the profits on import entitlements in the estimate of advance tax. Learned counsel further argued that the initial statement of advance tax filed on june 11, 1981, showing an income of Rs. 2,17,720 was based on the income of the previous....
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....n to believe to be untrue, he may direct that such person shall, in addition to the amount of tax, pay by way of penalty a sum which shall not be less than 10 per cent., but shall not exceed 1 1/2 times the amount by which the tax is actually paid during the financial year immediately preceding the assessment year under the provisions of Chapter XVII-C falls short of 75 per cent. of the assessed tax as defined in sub-section (5) of section 215. The crucial expression used in clause (aa) of sub-section (2) of section 273 is "which he knew or had reason to believe to be untrue." Therefore, what is to be seen is as to whether the appellant had knowingly furnished an untrue estimate of advance tax or had reason to believe that the estimate furnished by it was untrue. A look at the order passed by the Assessing Officer shows that after issuing notice to the appellant under section 273(2)(aa) to which it did not submit reply, the Assessing Officer passed the order of penalty on the premise that it had knowingly filed an untrue estimate of advance tax. The Commissioner of Income-tax (Appeals) considered the written submissions dated january 16, 1992, and March 11, 1992, filed on its behal....