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TMI Blog1983 (1) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... response to the show-cause notice the assessee's representative contended that there was a claim for refund to the tune of Rs. 1,58,180 which it duly considered would result in a case of no liability. The ITO, however, held that this contention was not acceptable as the assessee had failed to pay advance tax without any reasonable cause. He, therefore, levied a penalty of Rs. 5,387. For the next year the ITO noticed that the assessee was served with a notice under section 210 of the Act asking for payment of advance tax to the tune of Rs. 2,87,090. It filed an estimate in Form No. 29 showing the estimate of tax liability at Rs. 65,000, but paid only Rs. 22,000 on 3-12-1974. The return was filed on 12-11-1975 showing an income of Rs. 4,92,55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the calculation of penalty has been made with reference to the amount by which the advance tax paid was short of the demand and not with reference to the difference in the estimate of advance tax filed by the assessee and 75 per cent of the assessed tax or the tax which would have been payable if the assessee had furnished a correct and complete estimate in accordance with the provision of section 209A(1)(a) of the Act. So that it follows that the emphasis by the ITO was on the failure of the assessee to pay the tax. The provisions of section 273(a), however, do not contemplate levy of any penalty for failure to pay advance tax. Of course, the marginal note to the section reads : 'False estimate of or failure to pay advance tax'. But the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 220 of the Act any amount specified as payable in a notice of demand shall be paid within 30[35] days of the service of notice at the place and to the persons mentioned in the notice and under sub-section (4) the assessee shall be deemed to be in default if the amount is not paid by him within the time limited under sub-section (1) or sub-section (3). Under section 221 of the Act where the assessee is in default or deemed to be in default, he shall, in addition to the amount of arrears or the amount of interest payable under section 220(2), be liable to pay such penalty as the ITO may direct. The calculation of the penalty is not to be made in the manner in which the ITO has done in the present case. Liabilities for interest under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee may or may not have a full picture of the result of the income earned in that year. The time for making that calculation comes at the time of filing of the return. Therefore, unless there is evidence to indicate that 10 or 12 days prior to or after the close of the accounting period the assessee knew or had reason to believe that the estimate filed by him was false, it cannot be presumed, simply because he had filed it after the expiry of the accounting year, that he had such knowledge. " In the present case, not a word has been suggested by the ITO that the estimate was untrue to the knowledge of the assessee. In these circumstances, the penalty under section 273(a) obviously cannot be maintained. Accordingly, we accept both ..... X X X X Extracts X X X X X X X X Extracts X X X X
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