Commissioner of Income Tax vs Almora Magnesite Ltd.

S.H. Kapadia, C.J.—Being aggrieved by the decision of the Tribunal deleting the penalty imposed by the AO, the Department has filed this appeal u/s 260A of the IT Act.

The appeal is in respect of the asst. yr. 1988-89.

The question which we are required to answer in this appeal is as follows :

"Whether the Tribunal was right in deleting the penalty imposed by the AO u/s 273(1)(b) of the IT Act for the asst. yr. 1988-89 ?"

The assessee filed its return of income on 29th June, 1988, declaring a loss of Rs. 1,52,15,207. The assessment was completed u/s 143(1)(a). The total income was determined at Rs. 4,92,501 after giving effect to Section 115 of the IT Act. The AO issued notice u/s 273(1)(b) of the IT Act on the ground that the assessee has failed to submit estimate of advance tax under Form No. 29. The AO, therefore, imposed penalty of Rs. 50,000. According to the AO, the assessee failed to file the estimate of advance tax u/s 209A of the IT Act. He, therefore, imposed penalty of Rs. 50,000. Being aggrieved, the assessee went in appeal to CIT(A).

The appeal was allowed on the ground that assessee had filed Form No. 29. The appellate authority found that in the present case even before the assessee could appear on 11th Dec., 1989, the AO passed penalty order u/s 273(1)(b); that the assessee had no opportunity to satisfy the AO that it had filed Form No. 29 declaring an income of Rs. 25,00,000 against the carry forward loss of earlier years, which was set off resulting in net loss of Rs. 90,00,000, The appellate authority also found technical default on the part of the assessee in not filing the statement in Form No. 28A and that instead of filing Form No. 28A, the assessee had by mistake filed Form No. 29. Therefore, the appellate authority deleted the penalty on the ground that the assessee had committed technical default; that there was no wilful default on the part of the assessee. This finding has been confirmed by the Tribunal. Therefore, the Department has come by way of appeal.

Mr. Posti, advocate appearing on behalf of the Department argued that the matter should be remanded because the point taken by the assessee before the appellate authority was not there before the AO and that a new case was made out by the assessee before the appellate authority. This is the only argument advanced on behalf of the Department.

We do not find any merit in this argument. Firstly we are concerned with the asst. yr. 1988-89. Secondly, the assessee has not made out a new case before the appellate authority. In the present matter proceedings u/s 273(1)(b) were fixed for hearing on 19th Dec., 1989, as per notice dt. 6th Dec., 1989, which was received by the assessee on 11th Dec., 1989. However before the assessee could appear before the AO on 11th Dec., 1989, the order u/s 273(1)(b) was passed by the AO ex parte. This order was passed ex parte on 30th Nov., 1989. Therefore, the assessee had no opportunity to put its case before the AO. Therefore, it is not a case of a new point being raised by the assessee. Thirdly, in the present case, the appellate authority and Tribunal have come to the conclusion concurrently that there was no wilful default on the part of the assessee. In the case of Hind Products Pvt. Ltd. Vs. Commissioner of Income Tax, Bombay City-1, , it has been held that the estimate of advance tax required to be filed under the IT Act must show estimated income for the relevant year. Estimated income may not be the same as ultimate reported income. Merely because at the end of the year an assessee is shown to have earned income, which is more than estimated income, it will not make the estimate untrue. In the present case, the appellate authority and the Tribunal have come to the conclusion that there was no wilful default on the part of the assessee. This is a concurrent finding.

In the circumstances, the appeal is dismissed. No order as to costs.