1979 (11) TMI 130 - AT - Income Tax

Summary

Issues:
Imposition of penalty under section 273(c) of the Income Tax Act, 1961 for failure to file estimate of advance tax and pay tax accordingly.

Analysis:
The appeal before the Appellate Tribunal ITAT Gauhati involved the imposition of a penalty of Rs. 3,000 on the assessee, a registered firm, for the assessment year 1977-78 under section 273(c) of the Income Tax Act, 1961. The penalty was initially imposed by the Income Tax Officer (ITO) and upheld by the Assistant Commissioner of Income Tax (AAC) in appeal by the assessee.

During the assessment proceedings, the ITO found that the assessed income of the assessee was significantly higher than the advance tax paid, leading to the issuance of a notice for imposition of penalty under section 273(c) of the Act. The assessee contended that the failure to file an estimate of advance tax was due to a bona fide belief that past losses could be adjusted against the current year's income.

The ITO imposed the penalty, considering the failure intentional, despite the assessee's explanation. In the subsequent appeal before the AAC, the penalty imposition was upheld, stating that the default was without any reasonable cause. The AAC emphasized the importance of complying with tax obligations and rejected the assessee's explanations.

In the second appeal before the Appellate Tribunal, the assessee reiterated its arguments, emphasizing its sincere payment of taxes and the belief regarding past losses adjustment. The Tribunal carefully considered the facts and legal precedents. It noted that the assessee had fulfilled its tax obligations promptly and consistently maintained its belief regarding past losses adjustment.

The Tribunal highlighted the quasi-judicial nature of penalty proceedings and the burden on the Department to establish prima facie evidence of liability for the penalty. It concluded that the Department failed to discharge this initial burden, and the facts did not justify the penalty imposition. Therefore, the Tribunal quashed the orders of the lower authorities, allowing the appeal by the assessee.