Law: Income Tax Act, 1961

Section: 273

Income-tax---Advance tax---Penalty---Failure to furnish estimate of advance tax--­Condition precedent for imposition of penalty---Failure should be without reasonable cause---Failure to furnish estimate because of bona fide belief that there would be no profits---Penalty could not be imposed---Indian Income Tax Act, 1961, S. 273. It, is clear from a plain reading of section 273(2)(c) of the Income Tax Act, 1961, that penalty can be imposed under the said provision if the Income-tax Officer is satisfied that the assessee has "without reasonable cause" failed to furnish the estimate of advance tax payable by him in accordance with the provisions of subsection (4) of section 209A of the Act. The satisfaction of the Income-tax Officer in regard to the failure of the assessee to furnish an estimate of the advance tax payable by him in accordance with the provisions of section 209A(4) of the Act "without reasonable cause" is, thus, the condition precedent for imposition of the penalty under this clause. 'This satisfaction must be based on the materials on record. It is only after the Income-tax Officer arrives at a finding that the failure to furnish the estimate was "without reasonable cause" that he can impose penalty. In the assessment of the assessee-company for the assessment year 1979-80, the Income-tax Officer noticed that on June 14, 1978, the assessee ­company had filed a statement in Form No.28A showing loss of Rs.3,199 while its income was assessed at Rs.3,01,540. The Income-tax Officer therefore, initiated proceedings for levy of penalty under section 273(2)(c). The assessee explained that it had accumulated losses and. unabsorbed allowances amounting to Rs.28,897 and that on the date of submission of the statement in Form No.28A it had expected to make a profit of Rs.25,698 only during the previous year relevant to the assessment year under consideration, It was contended that revised estimate under section 209A(4) of the Act was not submitted because the accounts could not be audited and the correct income could not be ascertained. No further statement of advance tax could be filed as the accountant was frequently indisposed and the correct profit of…

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