Law:

Section:

Section 273 of the Income-tax Act, 1961 - Penalty - For false estimate of, or failure to pay advance tax - Assessment years 1977-78 and 1978-79 - Assessee-firm, after filing its estimate of advance tax before due date indicating amount of tax deducted at source, filed its returns accordingly - Assessing Officer made certain additions to the assessee's income by invoking section 41(1) and also imposed penalty under section 273(1)(a ) on ground that it had furnished said estimate of advance tax which it knew or had reasons to believe to be untrue - Whether since assessee never wanted liability to cease, it could not be accepted that assessee knew or had reason to believe that estimate of advance tax filed by it was untrue - Held, yes - Whether in absence of any cogent evidence having been adduced by revenue that assessee had deliberately filed incorrect estimate of income for purpose of advance tax, Assessing Officer was not justified in imposing penalty under section 273(1)(a) - Held, yes FACTS The assessee-firm subsequent to the filing of estimate of advance tax showing the amounts of tax liability and the advance tax deducted at source, filed its returns declaring its total income. The Assessing Officer made certain additions to the assessee's income mainly on account of unsupported credits by invoking section 41(1). The Assessing Officer also issued notices to the assessee proposing to impose penalty under section 273(1)(a) on the ground that it had furnished the said estimate of advance tax which it knew or had reasons to believe to be untrue. In reply thereto, the assessee pleaded that it could not foresee the impending additions at the time of filing the said estimate and that additions subsequently made by the Assessing Officer by adopting a particular interpretation of section 41(1) could not be made basis for imposing penalty under section 273(1)(a). The Assessing Officer, however, imposed penalty upon the assessee. On appeal, the Commissioner (Appeals) deleted the penalty. On revenue's appeal, the Tribunal sustained the order of the Commissioner (Appeals). On reference: HELD In the absence of any cogent evidence having been adduced by the revenue that…

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