Law:

Section:

Section 273 of the Income-tax Act, 1961 [Corresponding to section 18A(3) of the Indian Income-tax Act, 1922] - Penalty - For false estimate of or failure to pay advance tax - Assessment years 1959-60 and 1960-61 - Whether where in respect of a default committed under section 18A(3), assessment is completed after 1-4-1962, i.e. after coming into force of new Act, penalty could be imposed under section 273(b) - Held, yes FACTS The assessee HUFs had their sources of income from house property, share of profit from the two firms. They also had dividends and speculative business. Their income exceeded the minimum limit for the purposes of section 18A(3) and because the assessee failed to comply with the provisions of the said section and did not submit the estimate of advance tax payable by them before 15-3-1959, the ITO imposed penalties on both the assessees. On appeal, the AAC reduced the quantum, of penalties. On further appeal to the Tribunal the assessee challenged the penalties, firstly, on the ground that no penalty could be imposed under section 273 because the assessments related to the years 1959-60 and 1960-61 to which the provisions of the 1961 Act were inapplicable; secondly, that the estimates were filed on 20-3-1959, and 30-3-1960, and the default was only for a few days. The Tribunal, however, found relying on various High Court decisions, that the defaults made under section 18A(3) could not be proceeded against under the new Act. The Tribunal found that there was a delay of 5 days only in respect of the assessment year 1959-60 and there was a reasonable excuse for such delay, but held that in relation to the year 1960-61, it could not be said that the assessee had any reasonable cause for the delay in the submission of the return. The Tribunal accordingly found that the penalties imposed by the AAC were not legal and, if recovered, should be refunded. HELD The Supreme Court in Jain Brothers v. Union of India [1970] 77 ITR 107and CIT v. Singh Engineering Works (P.) Ltd.[1978] 78 ITR 90 held that the provisions of the 1961 Act would applymutatis mutandis to proceedings relating to penalty initiated in accordance with 1961 Act. In view of said…

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