1976 (5) TMI 54 - AT - Income Tax

Summary

Issues:
1. Penalty under section 273(c) of the Income Tax Act, 1961 for failure to file an estimate under section 212(3A) for the assessment year 1970-71.

Detailed Analysis:
The Departmental appeal before the Appellate Tribunal ITAT MADRAS-B arose from the order of the AAC, where a penalty of Rs. 612 under section 273(c) of the IT Act, 1961 was deleted. The assessee was called upon to pay an advance tax of Rs. 3,665 based on the last completed assessment, and the assessee complied with the demand. The total income in the assessment was Rs. 41,700, higher than the declared income of Rs. 21,975. The ITO imposed a penalty for failure to file an estimate under section 212(3A) of the Act. The assessee explained that her main source of income was share income from firms, and she did not file an estimate as she believed her income would not exceed Rs. 23,000. The ITO imposed a penalty despite the explanation.

The AAC canceled the penalty after considering the evidence presented. The AAC noted that the assessee's main income was from share income in a firm that filed a revised return after the original return did not include interest received from an allied concern. The AAC found that the assessee had a reasonable cause for not filing a revised estimate under section 212(3A) within the deadline. The penalty was canceled based on the reasonable cause for the failure to file the estimate.

The Revenue appealed the AAC's decision, arguing that there was no reasonable cause for the failure to file the estimate under section 212(3A). The Revenue contended that the assessee could have estimated her share income correctly based on the firm's accounting year and the lack of significant additions to the firm's total income. However, the Tribunal upheld the AAC's decision, stating that the assessee's bonafide impression that her share income would not exceed Rs. 23,000 was a reasonable cause for not filing the estimate. The Tribunal emphasized that the levy of penalty for failure to file an estimate is not automatic and must be without reasonable cause. Therefore, the Tribunal dismissed the Revenue's appeal and upheld the AAC's order canceling the penalty.

In conclusion, the Tribunal found that there was a reasonable cause for the assessee's failure to furnish the estimate under section 212(3A) and upheld the AAC's decision to cancel the penalty.