TMI Blog2013 (3) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (2008 (10) TMI 12 - SUPREME COURT). There cannot be any quarrel with the principles laid down by the Bombay High Court in the case of Hind Products Pvt. Ltd. (1980) 121 ITR 903) and of the Calcutta High Court in the case of Birla Cotton Spinning & Weaving Mills Ltd. (1985 (1) TMI 15 - CALCUTTA HIGH COURT) wherein it has been held that the very word estimate implies presumptions and not accuracy and merely because at the end of the year an assessee is shown to have earned an income which is more than that shown in the estimate. The finding of the Income Tax Appellate Tribunal that the assessee has not been able to specify the reasons as to why it considered the depreciation in investment allowance on the machinery which was yet to be installed for computing the income liable to pay advance tax, is neither perverse nor vitiated in law. Tribunal recorded its agreement with the findings of the Commissioner of Income Tax (Appeals) and consequently upheld the order of the Commissioner of Income Tax (Appeals) on this point. - It cannot be said that the Tribunal had not applied its mind to the matter of merits and as the assessee had failed to refute the specific findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, etc. Its accounting year is the calendar year. For the assessment year 1979-80, relevant to the accounting year ending on 31.12.1978, the appellant filed its return of income on 2.11.1979 declaring a total income of Rs.7,74,88,130/-. The Income Tax Officer, Central Circle, XVIII, New Delhi, who was the Assessing Authority of the appellant, passed an order on 4.1.1982 under Section 143(3) read with Section 144B of the Act proposing to make variation to the returned income of more than Rs.1,00,000/- to which the appellant filed objections vide letter dated 7.1.1982. The Inspecting Assistant Commissioner of Income Tax (Central) Range III, New Delhi to whom the draft assessment order as also the objections were referred, after considering the matter, issued certain directions to the Assessing Authority for making the assessment. The Assessing Authority, vide order dated 31.8.1982, completed the assessment in accordance with the direction given by the Inspecting Assistant Commissioner. He determined the total income at Rs.11,32,77,699/-. While passing the assessment order on 1.8.1982, the Assessing Authority also initiated proceeding for imposition of penalty under Section 273(2)(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity of the appellant, rejected the objection/explanation given by the appellant and passed an order under Section 273(2)(a) of the Act imposing a penalty of Rs.15,00,000/-. 5. Feeling aggrieved, the appellant preferred an appeal before the Commissioner of Income Tax (Appeals), IX, New Delhi, who, vide order dated 10.4.1989, had allowed the appeal. The Commissioner of Income Tax (Appeals) while rejecting the plea advanced by the appellant that the proceeding for imposition of penalty should have been initiated while passing the draft assessment order and the estimate of advance tax filed by it was not untrue to its knowledge and belief, had allowed the appeal only on the ground of limitation. 6. The appellant as also the Revenue, feeling aggrieved, preferred separate appeals before the Tribunal. The Tribunal, by the impugned order, had dismissed the appeal preferred by the appellant whereas it had allowed the Revenue's appeal. It had held that the order of penalty had not been passed beyond the prescribed period of limitation. It had upheld the findings of the Commissioner of Income Tax (Appeals) on merits of the matter. 7. We have heard Sri R.S.Agrawal, learned counsel appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority that the estimate of the advance tax furnished by the appellant was not only untrue but the assessee also knew or had reason to believe the same to be untrue, which in the present case is not the position. 12. He has further submitted that the Tribunal being the last fact-finding authority, ought to have given its independent reasons even if it had to concur with the findings recorded by the Commissioner of Income Tax (Appeals), which, in the present case, having not been done, the order of the Tribunal is liable to be set aside with a direction to be given to the Tribunal to decide the appeal afresh on merits. He has relied upon the following decisions:- (i) Udhavdas Kewalram v. Commissioner of Income Tax, Bombay City - 1, (1967) 66 ITR 462 (SC); (ii) Esthuri Aswathiah v. Commissioner of Income Tax, Mysore, (1967) 66 ITR 478 (SC); (iii) Killick Nixon and Co. v. Commissioner of Income Tax, Bombay City - 1, (1967) 66 ITR 714 (SC); (iv) Commissioner of Income Tax v. Dunlop India Ltd., (1992) 197 ITR 34 (Cal) ; and (v) Vinjane Centre v. Deputy Commissioner of Income Tax, (2002) 258 ITR 191 (Mad). 13. Sri R.K.Upadhyaya, learned Senior Standing Counsel, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question as to whether the Tribunal ought to have given its own findings, even while affirming the view taken by the Commissioner of Income Tax (Appeals), regarding imposition of penalty on merits, is concerned, he has submitted that an order of affirmance need not give detail reasons. In the present case, the Tribunal has recorded that it had concurred with the findings given by the Commissioner of Income Tax (Appeals) and, therefore, detail reasons were not required at all for which he has relied upon a decision of the Apex Court in the case of Commissioner of Income Tax, Bangalore v. K.Y.Pilliah and Sons, (1967) 63 ITR 411. 17. We have given our thoughtful consideration to the various pleas raised by the learned counsel for the parties. We find that under Section 144B of the Act, the Assessing Officer has to forward a draft order containing the variations proposed by him to the assessee and to forward the objections received by him alongwith the draft order and the record to the Inspecting Assistant Commissioner for his guidance. The Inspecting Assistant Commissioner has to consider the draft order and the objections and to give the directions to the Assessing Officer who h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose would not be fructified if the assessee is not informed with regard to levy of interest or penalty proceeding in the draft order. With respect, we are unable to persuade ourselves to agree with the view taken by the learned Judges of the Gujarat High Court in the aforesaid case. As already mentioned hereinbefore, under Section 144B of the Act the variations proposed in the returned income or loss above the specified limit alone has to be referred to the Inspecting Assistant Commissioner alongwith the objections of the assessee. The initiation of penalty proceeding under Section 273(2) of the Act would not amount to making a variation in the returned income or loss filed by an assessee. Thus, there is no necessity of proposal to initiate penalty proceeding in the draft order. No doubt, penalty is an additional tax but that would not make it a process of assessment contemplated under Section 143 of the Act. 19. We are fortified in the view by the decision of the Hon'ble Supreme Court in the case of Karanvir Singh Gossai (Supra) wherein it has been held that the recitation in the assessment order by the Assessing Officer directing institution of penal proceedings is not oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this as a reasonable cause for filing the estimate of advance tax which ultimately proved to be false and incorrect. So far as the cement unit no.II is concerned, it has been found that the machinery worth Rs.5 crores alone was installed and brought in use in the year and machinery worth Rs.9 crores was not even received by the assessee during the year. The internal report of the Project Head was disbelieved and this also did not constitute a reasonable cause for filing incorrect estimate of advance tax. 22.From the narration of the aforesaid fact, it is seen that the assessee had filed an estimate of advance tax which it knew to be wrong or false or untrue and, therefore, penalty had rightly been levied. 23.In the case of Ananatharam Veerasinghaiah Co. (supra) which was a case dealing with imposition of penalty under Section 271(1)(c) of the Act, before its amendment in the year 1964, relating to the assessment year 1959-60, following its earlier decision in the case of Commissioner of Income Tax v. Anwar Ali, (1970) 76 ITR 696 (SC), the Apex Court has held that the burden remains on the Revenue of proving the existence of material leading to the conclusion that the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn to be untrue or the assessee has reason to believe that it was untrue. In the present case, we find that the claim of depreciation and investment allowance on machinery which the assessee had not even received and installed during the year in question, was clearly an after thought and based on procured documents, as found by all the authorities. The plea of excess excise liability was also not bona fide. Thus, the assessee was liable to pay the penalty under Section 273(2)(a) of the Act. 25. In view of the foregoing discussions, we are of the considered opinion that the finding of the Income Tax Appellate Tribunal that the assessee has not been able to specify the reasons as to why it considered the depreciation in investment allowance on the machinery which was yet to be installed for computing the income liable to pay advance tax, is neither perverse nor vitiated in law. 26. This leaves us to the third substantial question of law as to whether the Income Tax Appellate Tribunal ought to have recorded independent finding while confirming the order of the Commissioner of Income Tax (Appeals) on the merits of the matter. It is not in dispute that the Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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