- (1.) This is an appeal by the Revenue objecting to the order of the CIT(A) cancelling a penalty of Rs. 90,451 imposed under S. 273(2)(aa) of the IT Act, 1961.
(2.) The assessee is a company carrying on business in the manufacture and sale of tea and also trading in industrial gases. The assessment year is 1985-86 for which the previous year ended on 31st Dec., 1984. The assessee submitted a revised estimate of its income for purposes of advance tax on 15th Dec., 1984 estimating its income at Rs. 14,50,000 and paid advance tax of Rs. 8,06,542 thereon. This estimate was considered to be falling within the mischief of S. 273(2)(aa) of the Act as the total income assessed under S. 143(3) on 28th March, 1988 amounted to Rs. 25,26,490 which, on appeal, was reduced to Rs. 24,44,700, as could be seen from the revised order passed under S. 251 on 21st Sept., 1988. Before completing the assessment, the ITO had initiated penalty proceedings under S. 273(2)(aa) of the Act and called upon the assessee to show cause against the levy of penalty. As there was no response to the said show cause notice, which was fixed for hearing on 27th Sept., 1989 the ITO presumed that the assessee had no explanation to offer. He, therefore, concluded that the estimate of advance tax filed by the assessee on 15th Dec., 1984 under S. 209A(4) was submitted wilfully and knowingly and for which a penalty was exigible. He, therefore, imposed a penalty of Rs. 90,451 representing 25% of the shortfall between 83.1/3% of assessed tax and the advance tax paid by the assessee.
(3.) The assessee appealed against this penalty and contended that the ITO had fixed the case for hearing only for one day on 27th Sept., 1989 just before the beginning of the Puja holidays and that, therefore, it had no reasonable opportunity of being heard against the penalty being imposed. On the merits, it was submitted that the income assessed at Rs. 24,44,700 was due to the fact that an amount of Rs. 6,25,653 claimed by the assessee as depreciation on oxygen cylinders was disallowed by the Departmental authorities and the assessees appeal against such disallowance was pending before the Tribunal. It was pleaded that if the said disallowance is excluded, there could be no penalty leviable against the assessee.;