Law:

Section:

Section 273 of the Income-tax Act, 1961 (Corresponding to section 18A of Indian Income-tax Act, 1922) - Penalty - For false estimate of or failure to pay advance tax - Assessment years 1960-61 and 1961-62 - Whether where assessment for year ending on 31-3-1962 or any earlier year, was completed on or after 1-4-1962, section 297(2)(g) of 1961 Act would be applicable and therefore, penalty could be levied under section 273 of 1961 Act upon assessee for defaults committed under section 18A of 1922 Act - Held, yes FACTS On the basis of the last completed assessment the ITO by notices issued under section 18A(1) of the 1922 Act required the assessee to make advance payment of tax for the assessment years 1960-61 and 1961-62. The assessee, however, chose to file its own estimates of tax under section 18A(2) of the 1922 Act and paid advance tax accordingly. The ITO completed the assessment at the income, which was very much above the income and tax estimated for advance payment of tax. As the assessee filed no explanation for filing inaccurate and untrue estimates of tax, the ITO imposed penalties under section 273 of the 1961 Act, The AAC upheld the order of the ITO. The Tribunal cancelled the penalty orders accepting the assessee's, plea that the penalties could not be imposed under section 273 of the 1961 Act in respect of the assessment years 1960-61 and 1961-62. The High Court upheld the Tribunal's order. On appeal to the Supreme Court : On reference: HELD Section 297(2)( g) was clearly applicable to the instant case inasmuch as the assessment was completed on or after the first day of April 1962. The provisions of the 1961 Act contained in section 273 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with section 297(2)(g ) of the 1961 Act. Therefore, penalty under section 273 of the 1961 Act was leviable upon the assessee for its defaults under section 18A of the 1922 Act. Note : The case was decided against the assessee. CASES REFERRED TO Jain Brothers v. Union of India [1970] 77 ITR 107 (SC) and Third ITO v. Devender Bhat [1969] 71 ITR 806 (SC). JUDGMENT Grover, J.--The respondent-company which is an assessee was required…

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