Law:

Section:

SECTION 273 OF THE INCOME-TAX ACT, 1961 [AS IT STOOD PRIOR TO 1-4-1970] - PENALTY FOR - FALSE ESTIMATE OF OR FAILURE TO PAY ADVANCE TAX - ASSESSEE HAD GINNING AND PRESSING FACTORIES AT FOUR PLACES - IT FILES ITS OWN ESTIMATE OF INCOME UNDER SECTION 212 WHICH FELL SHORT OF ADVANCE TAX DEMANDED UNDER SECTION 210 - LATER ASSESSEE RETURNED INCOME WHICH WAS HIGHER THAN SHOWN BY IT IN ESTIMATE AND INCOME ASSESSED WAS EVEN HIGHER THAN RETURNED BY ASSESSEE - ITO IMPOSED PENALTY ON ASSESSEE UNDER SECTION 273 - AAC AND TRIBUNAL FOUND THAT THERE WAS REASONABLE BASIS FOR SUBMITTING THE ESTIMATE AND THAT ESTIMATE COULD NOT BE CHARACTERISED AS ONE WHICH ASSESSEE KNEW TO BE TRUE - WHETHER MERE DISPARITY BETWEEN THE INCOME ESTIMATED AND THE INCOME RETURNED WOULD JUSTIFY IMPOSITION OF PENALTY UNDER SECTION 273 - HELD, NO - WHETHER IN THE ABSENCE OF EVIDENCE THAT ASSESSEE HAD CONSCIOUSLY FILED FALSE ESTIMATE PROVISION UNDER SECTION 273 COULD BE ATTRACTED - HELD, NO - WHETHER IN VIEW OF FINDING OF AAC AND TRIBUNAL IN INSTANT CASE PENALTY WAS IMPOSABLE - HELD, ON FACTS, NO Facts For the assessment years 1966-67 and 1968-69, the assessee-company having ginning and pressing factories in four cities paid advance tax according to its own estimate of its income, which fell short of the amount demanded under section 210 as well as of the amount finally returned by the assessee as its income. The income finally determined in assessment was more than the income returned by the assessee and the ITO started penalty proceedings under section 273. The ITO imposed penalty. On appeal, the AAC found (i) that the difference was only in ginning and pressing factories accounts which were situated at four different cities, (ii) that when assessee filed the estimate, cotton season was in full swing and complete data of the yield was not received from different factories, (iii) that the correct particulars of yield were generally available only after 5/6 months of the close of the season and, therefore, assessee for the purpose of estimate adopted the yield of the earlier year. Accordingly, the AAC held that the assessee had basis for submitting the estimates and that the estimates were made on the…

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