Law:

Section:

Section 273 of the Income-tax Act, 1961 – Penalty – For false estimate of or failure to pay advance tax – Assessment year 1970-71 – Assessee-company considering that two amounts representing cash assistance on exports received from Government and proceeds of sale of import entitlements were capital receipts, showed same in its return under Part D, but did not include same in its estimate of advance tax filed under section 212 – ITO issued notice under section 273 on ground of failure of assessee to file true estimate – Question whether said amounts were revenue receipts or capital receipts was pending before High Court – In earlier years, AAC had held that similar type of receipts as revenue receipts and in background of facts auditors of assessee had advised it that said receipts were revenue receipts – Whether for purpose of issuance of notice under section 273 it was sufficient if there was tentative and prima facie satisfaction which would justify embarking on enquiry as to whether assessee was guilty of offence mentioned in section 273 - Held, yes – Whether on facts, it could be said that there were materials for tentative satisfaction sufficient enough to entitle ITO to embark on said enquiry - Held, yes – Whether, therefore, issuance of impugned notice was justified – Held, yes FACTS In its return filed for the relevant assessment year, the assessee-company indicated under part D, two amounts representing cash assistance on exports received from the Government of India and proceeds of sale of import entitlements as non-taxable. Subsequently, it filed a revised return excluding from his income said two amounts. The ITO made assessment on total income which included said amounts. Thereafter, the ITO issued a show cause notice under section 273 to the assessee for having filed an untrue estimate on ground that the assessee had not includes the said amounts in its estimate of advance tax filed under section 212. On writ, the assessee contended that whether the amounts received on transfer or assignment of import entitlement or the amount of cash assistance or export receipts from the Government of India were revenue receipts or capital receipts were…

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