- (1.) PURSUANT to the direction of the High Court under Section 256(2) of the Income-tax Act, 1961 (briefly, "the Act"), the Income-tax Appellate Tribunal referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was in law justified in cancelling the penalty imposed by the Income-tax Officer under Section 273(c) of the Income-tax Act ?"
(2.) THE facts as found by the Appellate Tribunal are that the assessee filed its return of income declaring income of Rs. 31,25,628. THE tax payable thereon came to Rs. 19,58,710. THE income finally assessed, however, was Rs. 57,59,840 on which tax liability came to be Rs. 36,15,632. THE difference between the returned income and the finally assessed income was mainly due to the following two items : JUDGEMENT_810_ITR230_1998Html1.htm The contention of the assessee was that the aforesaid amount did not constitute assessable income in its opinion and, therefore, the same was not shown in its return though that was declared in Part IV of the return as being the income in respect of which exemption was claimed. If such amount is excluded, the tax on the returned income did not exceed 33 1/3 per cent. of the income on the basis of which the demand notice under Section 210 of the Act was issued to the assessee. Therefore, according to the assessee, there was no liability to file an estimate under Sub-section (3A) of Section 212 of the Act. The Assessing Officer rejected the contention of the assessee and the amount of Rs. 36,15,632 was imposed as tax and it was held that the assessee was under a legal obligation to file an estimate under Section 212(3A). For not filing such estimate, penalty was imposed under Section 273(c) of the Act, which was affirmed on appeal by the appellate authority.
(3.) ON further appeal, the Appellate Tribunal held as follows : "After carefully examining the rival submissions and the facts on record, we are of the opinion that there is merit in the assessee's submissions. The sum of Rs. 25,27,198 has no doubt been held by the Tribunal as assessable and this has also been the concurrent finding of the authorities below. But for the purposes of determining if the assessee had committed default as contemplated by Clause (c) of Section 273, we have to look not at what the final finding in a given case is, but as to what was the impression of the assessee at the time when it had to do what the statute required it to do. As the assessee's conduct manifest from the filing of its return shows, it regarded the aforesaid sum of Rs. 25,27,198 as not being its taxable income for the various reasons, which it explained in the course of its assessment proceedings. The mere fact that in its accounts, the aforesaid sum was treated as its revenue receipt, would not automatically go to show that the assessee was of the opinion that this receipt would also be taxable. What the assessee has to do under Section 212(3A) is to file an estimate of the advance tax payable by it if the tax payable by it on its current income exceeds by 1/3rd the tax demanded under Section 210. It is implied in this obligation that the assessee has to take note of not what its income from all the various sources is, but as to what according to it would be its taxable income on which tax would be payable by it. From the available evidence on record, it appears to us that the assessee was clearly of the opinion, may be erroneously, that the sum of Rs. 25,27,198 was not taxable income. Accordingly, it did not include it in its estimate of current income and filed no estimate of advance tax. Looking at the matter from the assessee's standpoint at the relevant time, we do not find this conduct of the assessee dishonest or contumacious. It acted according to its opinion believing bona fide that the said sum of Rs. 25,27,000 did not form part of its income. As such, we are of the opinion that penalty in terms of Section 273(c) should not be imposed on the assessee." From the above reproduced finding of the Appellate Tribunal, it is clear that the penalty was not affirmed as the Tribunal was of the view that the conduct of the assessee was not dishonest and contumacious in not having filed the estimate under Section 212(5A) of the Act. The question whether the conduct of the assessee was dishonest and contumacious, is essentially a question of fact. The finding of the Appellate Tribunal on such a question is a pure finding of fact and there is nothing on record to indicate that that finding was perverse or per se illegal in any way.;