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Issues Involved:
1. Validity of the imposition of penalty under section 273(c) of the Income-tax Act, 1961. 2. Legality of the demand raised under section 210 of the Income-tax Act, 1961. Detailed Analysis: 1. Validity of the Imposition of Penalty under Section 273(c) of the Income-tax Act, 1961: The core issue was whether the Tribunal was correct in holding that there was no invalidity in the imposition of penalty under section 273(c) of the Income-tax Act, 1961, despite the demand raised under section 210. The assessee argued that the penalty proceedings were invalid as there was no valid order under section 210. The Income-tax Officer (ITO) had demanded advance tax based on the latest assessed income for the assessment year 1967-68, instead of the income returned by the assessee for the assessment year 1969-70. The assessee contended that since the demand under section 210 was not based on the latest income returned and tax paid under section 140A, it was invalid, and thus, the penalty under section 273(c) could not be imposed. The Tribunal, however, held that the original demand under section 210 was not bad in law. The Tribunal reasoned that the basic requirement of section 209(1)(c) had been satisfied, and the ITO's failure to substitute a higher demand did not invalidate the original order. The Tribunal concluded that the assessee was obligated to file an estimate under section 212(3A) and the failure to do so justified the imposition of penalty under section 273(c). 2. Legality of the Demand Raised under Section 210 of the Income-tax Act, 1961: The assessee challenged the demand raised under section 210 on the grounds that it was based on the assessed income for the assessment year 1967-68, rather than the income returned for the assessment year 1969-70, for which tax had been paid under section 140A. The Appellate Assistant Commissioner (AAC) agreed with the assessee, holding that the notice under section 210 was invalid as it should have been based on the total income of Rs. 4,14,313 (assessment year 1969-70) instead of Rs. 2,87,480 (assessment year 1967-68). The AAC also found the revised notice on February 17, 1971, invalid for similar reasons. The Tribunal, however, disagreed with the AAC's findings. It held that the original demand under section 210 was valid as it was based on the latest completed assessment. The Tribunal reasoned that the ITO's oversight in not demanding a higher amount of advance tax did not invalidate the demand. The Tribunal emphasized that the demand was based on a valid order, and the assessee's obligation to file an estimate under section 212(3A) remained. The Tribunal's decision was supported by the High Court, which found that the demand under section 210 was not a nullity. The High Court reasoned that the ITO's failure to demand a higher amount of advance tax did not strip him of jurisdiction to initiate penal proceedings. The High Court distinguished the present case from the cases cited by the assessee, noting that in those cases, the demands were based on non-existent or invalid assessments, which was not the situation in the present case. Conclusion: The High Court upheld the Tribunal's decision, affirming that the demand raised under section 210 was valid and that the imposition of penalty under section 273(c) was justified. The Court concluded that the assessee's arguments were hyper-technical and did not preclude the initiation of penal proceedings. The question was answered in the affirmative and against the assessee, with no order as to costs.
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