High Court Of Delhi
Escorts Electronics Ltd. vs. CIT
Section 273
Asst. Year 1982-83
D.K. Jain & Ms. Sharda Aggarwal, JJ.
IT Appeal No. 181 of 2001
11th September, 2002
Counsel Appeared
Santosh K. Aggarwal, for the Appellant : R.D. Jully, for the Respondent
JUDGMENT
D.K. JAIN, J. :
This appeal under s. 260A of the IT Act, 1961 (for short the Act), is directed against the order, dt. 16th April, 2001, passed by the Income-tax Appellate Tribunal, Delhi Bench (for short ‘the Tribunal’) in ITA No. 6733/Del/1995. By the impugned order the Tribunal has dismissed the appeal filed by the assessee against the levy of penalty of Rs. 70,000 under s. 273 of the Act in respect of asst. yr. 1982-83.
2. Admit. The following substantial question of law is framed for adjudication : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the levy of penalty of Rs. 70,000 under s. 273 of the IT Act, 1961 ?” 3 With the consent of counsel for the parties we proceed to dispose of the appeal at this stage itself. Background facts, relevant for the present purpose, are that for the relevant assessment year, the assessee had filed its return of income declaring a loss of Rs. 11,76,539. However, the AO computed the total income for the year at Rs. 12,26,394. The said income was arrived at by disallowing set off of carried forward unabsorbed depreciation of earlier years against the income assessed under the head ‘Income from other sources’. Since the total income so computed was a positive figure, the AO initiated penalty proceedings against the assessee under s. 273 of the Act as the assessee had not paid advance tax. After affording an opportunity to the assessee, the AO levied a penalty of Rs. 70,000 under the said section. The penalty so levied was upheld by the CIT(A) and the Tribunal has also affirmed the same. The sole ground on which the levy of penalty has been upheld by the Tribunal is that since the income finally assessed works out to Rs. 12,26,394, it was incumbent upon the assessee to file an estimate under s. 212(3) and pay the advance tax accordingly and, therefore, failure to do so makes them liable for penalty under s. 273 of the Act. From the order it is evident that the Tribunal has not examined the case from the angle as to whether failure to furnish statement of advance tax was without any reasonable cause, within the meaning of s. 273(b) of the Act. This is how the assessee is in appeal before us. We have heard learned counsel for the parties. In our view the assessee deserves to succeed in the appeal. As noticed above, the Tribunal has sustained the penalty levied under s. 273 of the Act only on the ground that the total income forthe relevant assessment year, as computed by the AO being Rs. 12,26,394, the assessee was required to pay advance tax. On the contrary the stand of the assessee was that its total income for the relevant assessment year was nil after setting off the unabsorbed depreciation for the earlier years.
7. The question whether the assessee is entitled to set off unabsorbed depreciation of earlier years against the income assessed under the head ‘income from other sources’ is the subject-matter of IT Ref. No. 505/1992. Vide our separate judgment of even date in the aforenoted income-tax reference [reported as Escorts Electronics Ltd. vs. CIT (2002) 178 CTR (Del) 21—Ed.], we have opined that the assessee is entitled to the said set off. In the light of the said decision, admittedly, on account of the set off of unabsorbed depreciation for earlier years against the total income computed for the relevant assessment year, the taxable income would work out to nil and the assessee will not be liable to pay any tax in respect of this year. It is axiomatic that if there is no liability to pay income-tax, there is no obligation to pay advance-tax and consequently no occasion for levy of penalty for nonpayment of advance tax. In that view of the matter, we feel that it is unnecessary to go into the question as to whether the assessee had failed to furnish a statement of advance tax without any reasonable cause, particularly when the Tribunal has not gone into this aspect of the matter.
8. In the light of our decision in the said reference, the impugned order of the Tribunal upholding levy of penalty cannot be sustained. Accordingly the appeal is allowed and the question formulated above is answered in favour of the assessee/appellant. The appeal stands disposed of with no order as to costs.
[Citation : 258 ITR 26]
