TMI Blog1995 (10) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the same group filed their returns of income originally on 24-8-1987. Later on, they filed revised returns on 9-10-1987, offering additional amounts of Rs. 6.25 lakhs in the case of Sri Mohan V. Kalburgi, Rs. 6.5 lakhs in the case of Sri R.V. Kalburgi and Rs. 6 lakhs in the case of Sri Mahadev V. Kalburgi. The version of the assessees was that they were in possession of cash to the abovementioned respective extent of Rs. 6.25 lakhs, Rs. 6.5 lakhs and Rs. 6 lakhs for which they were unable to find out any suitable explanation. Hence, they considered it appropriate to offer these sums for taxation as income from other sources in terms of the provisions of section 69A. It was furthermore the version of the assessees that when they found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ali, 1986 (falling in Oct-Nov, 1986), there was sufficient time for them to file upward revised estimates of income and pay advance tax by 15-12-1986 being the date for payment of the last instalment of advance tax. On account of the failure on the part of the assessees to do so, the Assessing Officer has considered them to be liable to imposition of penalty under section 273(2)(c). The Assessing Officer also dismissed the other plea raised before him by the assessees to the effect that inasmuch as the entire interest levied under section 217 for the same failure had since been waived fully by the departmental authorities under rule 40, the same considerations should apply to levies of penalties also. The Assessing Officer ultimately came t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rily and the failure to indicate the same in the estimate, appears to be bona fide and the case appears to be a fit case for waiver of interest under Rule 40(5) of the IT Rules. " The CIT(A) commented thereafter that the IAC after considering the above report of the Assessing Officer concurred with him and approved the proposal for waiver of interest under section 217. The CIT(A) furthermore mentions in this connection that the IAC came to this view when the second return had been filed voluntarily and that the assessees had paid all the taxes on the assessed income as declared in the revised return and furthermore that the income declared therein appeared to be true and complete. The IAC also took into consideration the fact that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t represent income on which advance-tax was payable. On this consideration also, the CIT(A) cancelled the penalties. 6. The department has come up in further appeals before us against the above-mentioned decisions of the CIT(A). It is contended by relying on the decision of the Supreme Court in the case of Gujarat Travancore Agency v. CIT [1989] 177 ITR 455 that in the instant case, non-filing of a higher estimate of advance tax based on the facts of the case, itself constitutes a default entitling the Assessing Officer to impose penalty under section 273(2)(c) without considering whether the elements of mens rea existed or not. It is thus pleaded by the learned DR that the penalties be restored. 7. The learned counsel for the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration in the proceedings and also in payment of taxes, etc., these are however the requisite conditions for waiver of interest, etc., by the CIT under section 273A. So far as application of Rule 40 is concerned, when sub-section (5) of the same Rule is applied in waiving the interest in full, it has got to be concluded that the departmental authorities consider that in the circumstances of the case, it was not feasible for the assessee to have filed an upward revised estimate of advance tax. If that be so, the same considerations should surely apply to the case of penalty under section 273(2)(c) also. It is required to be taken due note of the fact that the extra amounts of income were declared in the revised returns as deemed income unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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