COMMISSIONER OF INCOME TAX Vs. MOTOR SALES LTD

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, Allahabad, has referred the following two questions of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this court :

(2.) Briefly stated the facts giving rise to the present reference are as follows : The assessment year involved is 1976-77. The respondent which is a public limited company was asked by the Income-tax Officer by way of notice dated April 25, 1975, for payment of advance tax of Rs. 3,79,701. The respondent filed its estimate in Form No. 29 on September 8, 1975, showing advance tax payable at Rs. 3,45,000. Another estimate of advance tax was filed on March 15, 1976 showing tax at Rs. 6,93,000. Since the estimate filed on March 15, 1976, was late it was treated as invalid and the estimate filed on September 8, 1975, was taken into consideration at the time of the assessment. The income which was disclosed by the respondent at Rs. 17,04,580 was enhanced to Rs. 22,04,760 as a result of an order passed under Section 263 of the Act by the Commissioner of Income-tax. The Income-tax Officer initiated proceedings for imposition of penalty under Section 273(a) of the Income-tax Act on the ground that the respondent had filed statement of advance tax payable by him which he had reason to believe to be untrue. As the tax paid by the respondent fell short of 75 per cent. of the assessed tax, he imposed a sum of Rs. 37,970 as penalty. The respondent preferred an appeal before the Commissioner of Income-tax (Appeals) who deleted the penalty which order has been affirmed by the Tribunal.

(3.) We have heard Shri A.N. Mahajan, learned standing counsel for the Revenue and Shri R.S. Agrawal, learned counsel for the respondent. Learned counsel for the Revenue submitted that as the respondent had filed an incorrect and untrue estimate of advance tax, the penalty had rightly been imposed. The submission is misconceived. Under Section 273(i) of the Act penalty has been provided for filing false estimate or failure to pay advance tax. The relevant provision reads as follows :