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TMI Blog1992 (7) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... 85,044 relating to the assessment year 1971-72 (previous year 1970-71). This demand of advance tax under section 210 was raised not on the basis of the income returned by the assessee before him for the assessment year 1969-70 at Rs. 4,14,313 as aforesaid, but on the basis of the income of Rs.2,87,480 being the latest assessed income relating to the assessment year 1967-68. The assessee, however, paid the instalments of advance tax in terms of the demand of the Income-tax Officer under section 210 on September 15, 1970, and December 15, 1970, each instalment being of Rs. 61,681. On February 17, 1971, the Income-tax Officer revised his order under section 210 and demanded advance tax of Rs. 9,22,366 on the basis of the returned income of Rs. 16,20,610 for the assessment year 1970-71. But, the assessee had not paid any tax by way of self-assessment under section 140A till February 17, 1971, i.e., the date of revision of the demand by the Income tax Officer. The assessee objected to the said revised order under section 210 by a letter dated March 1, 1971, contending that no tax under section 140A having been paid, it was not open to the Income-tax Officer to raise the enhanced demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with law and hence it was not under any obligation to file an estimate under section 212(3A). The Income-tax Officer held that the assessee failed to furnish the estimate under section 212(3A) as its income for the assessment year 1971-72 had been shown at Rs. 21,47,880 in the return. He, therefore, imposed a penalty of Rs. 1,00,000 under section 273(c) of the Act. When the matter came before the Appellate Assistant Commissioner, similar arguments were placed before him and reliance was placed on the decision of the Allahabad High Court in the case of Chitra Cinema v. ITO [1968] 68 ITR 877. In that case, it had been held that it was open to an assessee to challenge an order under section 210 if the amount of advance tax had not been computed in accordance with the principles set out in the statute. It was contended before the Appellate Assistant Commissioner that the assessee was under a bona fide belief that notice under section 210 was not in accordance with law and, therefore, there was no obligation to file an estimate under section 212(3A). The quantum of penalty was also challenged as being excessive. The Appellate Assistant Commissioner found force in the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income as indicated in a later year's return. In our opinion, the basic requirement of section 209(1)(c) had been satisfied though the Income-tax Officer had to substitute it by a higher demand. If there was a return for a later year on the basis of which tax under section 140A had been paid, the original order itself could not become bad in law only for that reason. It was based on a valid order and the total income taken was the total income of the latest completed assessment. Taking the total income of either of the years on the basis of which advance tax demand should have been raised and also considering the very high income earned by the assessee in this assessment year, obligation to file an estimate under section 212(3A) would certainly be there. We hold that, for the reasons given in the earlier order, the original demand order could not be held to be invalid and the Appellate Assistant Commissioner erred in holding so. However, we find that the Appellate Assistant Commissioner had not considered the question of imposition of penalty on merits and has not disposed of the assessee's ground regarding there being a reasonable cause for not furnishing an estimate and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act has been considered.(a) In the case of Chitra Cinema [1968] 68 ITR 877, the Allahabad High Court held that an order under section 210 of the Act calling upon the assessee to pay advance tax for 1963-64 on the basis of the total income of the previous year relevant to the assessment year 1959-60, which assessment had been set aside before the order under section 210 was made, was invalid. It was further held that the Department could not contend that, if the assessee disputed the amount demanded by the said order, it was open to him to file an estimate of advance tax under section 212(1) as section 212(1) presupposes a valid order under section 210. It was held (at page 878 of the Reports) : "if the assessment of that total income has been set aside, it is not open to the Income-tax Officer to consider that total income for the purpose of computing the amount of advance tax. An assessment which has been set aside exists no longer. It cannot constitute any basis for computing the amount of advance tax." The High Court further held that, though there was delay on the part of the assessee in approaching the court, the order under section 210 is " so patently illegal " that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Officer in respect of the years 1963-64 and 1964-65 will be set aside and the order for payment of advance tax for the year 1965-66 is also set aside. " The decisions relied upon by learned counsel for the assessee are distinguishable and do not provide an answer to the issue emerging from the facts in the present case. Here, the basic issue is whether the Incometax Officer, by not opting for the higher demand of advance tax, either due to inadvertence or want of care, is altogether debarred from raising a valid demand under section 210. Section 210 does not present much difficulty in the context of the present Case. The order of the Income-tax Officer under section 210 is assailed by the assessee on the ground that the said order is not in accordance with the provisions of section 209. Relevant part of section 209 as in force at the material time is reproduced: "209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows : (a) (i) his total income of the latest previous year in respect of which he has been assessed by way of regular assessment shall first b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch he has been assessed by way of regular assessment. The second step is to ascertain whether the assessee has filed any return for any later assessment year on payment of the self-assessment tax under section 140A and whether such returned income exceeds the total income for which the assessee was last assessed, i.e., the income referred to in the first step herein. Thus, in the second step, the Income-tax Officer has been given an opportunity of raising a higher advance tax than would be payable by the assessee going by his latest assessed income. In the present case, the Income-tax Officer has acted in oversight of the second situation which would have entitled him to demand a higher amount of advance tax from the assessee. The assessee now seeks to turn this against the Income-tax Officer's order under section 210 and contends that the demand under section 210 not being a valid demand, the Income-tax Officer cannot invoke section 212(3A) read with section 209(a), (c) and thus the initiation of penal proceeding under section 273(c) is devoid of sanction or inherent jurisdiction. In our view, the Income-tax Officer by not having demanded the higher amount of advance tax cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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