Law: Income Tax Act, 1922

Section: 18,18A(9)

Indian Income Tax Act, 1922 (XI of 1922)-Section 18A(9)-Advance Tax-Failure to furnish true estimate of income deliberately-Whether penalty leviable-Held yes: Case referred to:- Commissioner of Income Tax v. U.P. Tannery Co. (1977) 107 I.T.R. 655; (1978) 37 tax 277. JUDGMENT [The judgment of the Court was delivered by R.L. GULATI J ]-This is a reference under section 66(2) of the Indian income Tax Act. 1922 hereinafter referred to as "the Act"). The assessee is a private limited company carrying on business of tanning raw hides at Kanpur. The Income Tax Officer issued a notice under section 18A(i) of the Act requiring the assessee to pay in installments advance tax amounting to Rs. 15.79.954 relevant for the assessment year 1951-53. The assessee pair the first installment on 16th September. 1951. On 15th December, 1951, it filed an estimate disclosing its total income at Rs. 7 lakhs, at which tax payable worked out to Rs. 2,76,790. When the assessment for the year in question, namely, 1952-53, came to be made, the Income Tax Officer worked out a total income of Rs. 12,66,455 as against the estimated income of Rs. 7 lakhs submitted by the assessee. The income tax Officer being of the opinion that the assessee had furnished the estimate of the tax payable by it which it knew or had reason to believe to be untrue served a notice upon the assessee under section 28(i)(c) read with section 18A(9) of the Act. The assessee contended that the additions made to its returned income consisted of two items of Rs. 4,961,863 and Rs. 1,10,088, which at the time of the filing of the estimate the assessee did not consider as its income. The Income Tax Officer did not accept this explanation and imposed a penalty of Rs. 30,970. On Appeal, the Appellate Assistant Commissioner of Income Tax accepted the assessees explanation with regard to the item of Rs. 1,10,088 holding that the assessee could not be said to be guilty of filing a wrong estimate deliberately with regard to that item. He, however, did not accept the assessees contention with regard to the other item of Rs. 4,96,868. As a result, he reduced the penalty to Rs. 22,500. The assessee then went up in appeal before the…

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