1981 (2) TMI 93 - AT - Income Tax

Summary

Issues:
1. Imposition of penalty on the assessee for failure to file an estimate of advance tax under section 212(3A) of the IT Act, 1961.
2. Appeal against the penalty imposed by the Income Tax Officer (ITO) for the assessment year 1974-75.
3. Assessment of the assessee's income and tax liability for the relevant years.
4. Consideration of the bona fide belief of the assessee regarding eligibility for relief under section 80QQ of the IT Act, 1961.
5. Evaluation of the assessee's explanation for not filing an estimate of advance tax and the subsequent penalty imposed.

Detailed Analysis:
1. The penalty of Rs. 1,400 was imposed on the assessee by the ITO for the assessment year 1974-75 due to the failure to file an estimate of advance tax as required under section 212(3A) of the IT Act, 1961. The assessee challenged this penalty through an appeal to the Appellate Assistant Commissioner (AAC).

2. The notice under section 210 was served on the assessee in March 1974, based on the previous assessment for the year 1971-72. The ITO determined the total income for the year 1974-75 at a higher figure than the previous assessment, leading to the imposition of the penalty. The assessee filed a return showing income of Rs. 28,764, which was later revised by the ITO.

3. The ITO believed that the assessee should have filed an estimate of advance tax under section 212(3A) due to the increased assessed income. The ITO issued a show cause notice for the penalty under section 273 of the IT Act, 1961, as the assessee did not respond to the notice, the penalty was imposed.

4. The assessee contended that the firm he was associated with would be eligible for relief under section 80QQ, reducing his income. The AAC rejected this claim, but reduced the penalty imposed by the ITO to Rs. 700.

5. Upon further appeal, it was argued that the assessee's income was mistakenly declared higher, and the belief in eligibility for relief under section 80QQ was genuine. The Appellate Tribunal found merit in the assessee's explanation, considering the clerical error in income declaration and the bona fide belief in eligibility for relief. The Tribunal concluded that the penalty imposed was unjustified and deleted it, ruling in favor of the assessee.