Law:

Section:

Section 273 of the Income-tax Act, 1961 (Corresponding to section 18A(9)(a) of the Indian Income-tax Act, 1922 - Penalty - For false estimate or failure to pay advance tax - Assessment years 1953-54 and 1955-56 to 1958-59 - Though ITO called upon assessee to pay advance tax under section 18A(1) of 1922 Act assessee filed estimate under section 18A(2) and paid advance tax accordingly - As estimated income was much less than income finally assessed, ITO passed penalty orders under section 18A(9)(a) of 1922 Act - Tribunal confirmed penalty order - On instant reference, it was seen that in all relevant years, estimates were given practically at end of years - Thus assessee must have been in possession of sufficient materials as to how his business fared during relevant year - Whether since wide disparity between estimated income and assessed income was consistent feature for all years in question and not a casual feature in one year, it could be concluded that assessee knew, or had reason to believe, that estimates he was giving were false - Held, yes - Whether therefore, penalty was rightly levied on him under section 18A(9)(a) of 1922 Act - Held, yes FACTS The ITO called upon the assessee during the years in question to pay advance tax under section 18A(1) of the 1922 Act. Instead of paying the demanded amounts, the assessee filed estimates under section 18A(2) and on the basis of the said estimates paid advance-tax. Ultimately, for the several years, he filed returns; and the ITO finally determined his incomes too. Of course, there were appeals before the AAC and the Appellate Tribunal, but the assessments made by the ITO were confirmed. As the estimated income was much less than the income finally determined by the ITO, he passed penalty orders under section 18A(9)(a) of 1922 Act. On appeal, the penalty orders were confirmed by the Tribunal. On reference : HELD The explanations given by the assessee had been considered by the ITO and found to be not acceptable. In all these years, the estimates were given practically at the end of the relevant years. Evidently, the assessee must have been in possession of sufficient materials then as to how his businesses fared…

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