TaxTMI 
TaxTMI 
1992 (5) TMI 4
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....er adjustment of business loss of the year and after taking into account the deduction admissible under section 80M of the Income-tax Act, 1961. The assessment was completed on a total income of Rs. 2,47,571 which, in appeal, was reduced to Rs. 2,34,850. Finding that the assessee had defaulted in furnishing an estimate of advance tax payable by it as required under section 209A(1)(b), the Income-tax Officer initiated penalty proceedings under section 273(2)(b). The assessee submitted its explanation which was rejected by the Income-tax Officer who levied a penalty of Rs. 20,000. The assessee carried the matter before the Commissioner of Income-tax (Appeals) but it was unsuccessful. Before the Tribunal, the orders of the lower authorities were objected to and it was contended that the penalty was not justified. The Tribunal after considering the facts of the case and whatever submissions were made before it, found that the assessee did not file an estimate of income under section 209A(1)(b) of the Act as it believed that after taking into account the benefit of set off of business loss against the income under other heads there would be no taxable income. The Tribunal has furt....
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....on (2), of the Central Sales Tax Act, 1956, on the ground that the assessee had furnished false returns by not including the amount of freight in the taxable turnover disclosed in the returns. Now, it is difficult to see how the assessee could be said to have filed 'false' returns, when what the assessee did, namely, not including the amount of freight in the taxable turnover, was under a bona fide belief that the amount of freight did not form part of the sale price and was not includible in the taxable turnover. The contention of the assessee throughout was that on a proper construction of the definition of 'sale price' in section 2(o) of the Madhya Pradesh General Sales Tax Act, 1958, and section 2(h) of the Central Sales Tax Act, 1956, the amount of freight did not fall within the definition and was not liable to be included in the taxable turnover. This was the reason why the assessee did not include the amount of freight in the taxable turnover in the returns filed by it. Now ; it cannot be said that this was a frivolous contention taken up merely for the purpose of avoiding liability to pay tax. It was a highly arguable contention which required serious consideration by the ....
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....of freight in the taxable turnover shown in the returns and the Assistant Commissioner of Sales Tax was not justified in imposing penalty on the assessee under section 43 of the Madhya Pradesh General Sales Tax Act, 1958, and section 9, sub-section (2), of the Central Sales Tax Act, 1956." We may take note of the judgment of the Division Bench of this court in the case of Jeewanlal (1929) Ltd. v. ITO [1981] 130 ITR 405. In the aforesaid case for the assessment year 1970-71, the petitioner filed an estimate of its income under section 212 of the Income-tax Act, 1961, at a certain figure. On December 6, 1969, the petitioner filed another estimate of its income. After the petitioner had filed the second estimate of its income, on March 18, 1970, the Income-tax Officer, for the first time, held that receipts from sale of import entitlements were revenue receipts in connection with the return filed by the petitioner for the assessment year 1965-66. The petitioner, thereafter, on September 28, 1970, filed a revised return of income for the assessment year 1970-71. In the meantime, the petitioner had preferred an appeal to the Appellate Assistant Commissioner against the assessment mad....
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....s preferred by the petitioner relating to the assessment year 1965-66 had not been disposed of by the Appellate Assistant Commissioner and the same was disposed of on February 3, 1972, i.e., long after the petitioner had filed its revised estimate of advance tax. Therefore, that material was not present before the Income-tax Officer as the single judge had thought. (ii) That though the auditors in their report for 1964 had expressed an opinion that cash assistance and import entitlements were revenue receipts and hence taxable, the directors, in their report, did not accept the opinion of the auditors that the two amounts were revenue receipts and were accordingly taxable. In the subsequent years also the directors disagreed with the opinion of the auditors. Therefore, the petitioner had bona fide believed in good faith that the two amounts were not revenue receipts and, as such, they were not taxable. (iii) That, therefore, the notice issued to the petitioner was not valid. Our attention was also drawn to the judgment and decision in the case of ITO v. Burmah Shell Oil Storage and Distribution Co. of India Ltd. [1987] 163 ITR 496 (Cal) (at pages 509 and 510), observed as follow....
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....discretion under article 226 of the Constitution interfere for the sake of justice. In the facts and circumstances of this case, we are satisfied and also agree with the learned judge of first instance that the authority concerned does not have any jurisdiction to exercise the power to initiate proceedings for the imposition of any penalty on the respondent-company. The conditions for imposition of such penalty stipulated in section 271 for initiation of penalty proceedings, in the facts and circumstances of this case, are non-existent. We also agree with the learned judge of the court of first instance that the notices may not be statutory notices but it is on the basis of the said notices that the penalty proceedings against the respondent-company have been initiated and are being continued. In the above circumstances, in our view, it has been rightly held by the learned judge of the court of first instance that the court in the exercise of its discretion under article 226 of the Constitution should interfere." The principle is thus well-entrenched that the condition precedent for the very initiation of penal proceedings is that there must be deliberateness in not abiding by a....