Delhi H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee-company had a reasonable cause either in not filing the estimate of advance tax or for not paying the advance tax during the accounting period relevant to the asst. yr. 1967-68 ?

High Court Of Delhi

CIT vs. Freewheels India Ltd.

Section 273(b)

Asst. Year 1967-68, 1968-69

Arijit Pasayat, C.J. & D.K. Jain, J.

IT Ref. Nos. 50 & 51 of 1980

23rd October, 2000

Counsel Appeared

Ajay Jha, for the Revenue : S.K. Aggarwal with Vinay Vaish, for the Assessee

JUDGMENT

Arijit Pasayat, C.J. :

Pursuant to the directions by this Court under s. 256(2) of the IT Act, 1961 (in short “the Act”), the following questions have been referred by the Income-tax Appellate Tribunal, Delhi Bench-D (in short “the Tribunal”), for the opinion of this Court : In R.A. No. 45 (Del) of 1976-77 :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee-company had a reasonable cause either in not filing the estimate of advance tax or for not paying the advance tax during the accounting period relevant to the asst. yr. 1967-68 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs. 50,000 imposed under s. 273(b) for the asst. yr. 1967-68 and whether the provisions of s. 212(3) are not attracted in this case ?”

In R.A. No. 46(Del) of 1976-77

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee-company had a reasonable cause either in not filing the estimate of advance tax during the accounting period relevant to the asst. yr. 1968-69 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs. 40,000 imposed under s. 273(b) for the asst. yr. 1968-69 and whether the provisions of s. 212(3) are not attracted in this case ?”

2. For the relevant asst. yrs. 1967-68 and 1968-69, assessments were completed finally on the total income of Rs. 11,47,450 and Rs. 8,82,786, respectively. The assessee was required to file an estimate of itsincome for the relevant assessment years under s. 212(3) of the Act and pay tax accordingly, as first assessment in this case was made on 25th March, 1968, for both the years under consideration. It was, therefore, a case of a new assessee who had not been hitherto assessed. The ITO observed that the assessee filed an estimate of its tax liability at Rs. 5,50,000 on 3rd March, 1967, for the asst. yr. 1967-68 and at Rs. 4,93,950 on 23rd March, 1968, for the asst. yr. 1968-69. Fresh notices were issued to the assessee to show cause as to why penalty under s. 273 should not be levied. Various contentions were raised by the assessee which did not find acceptance of the AO. Penalties of Rs. 50,000 and Rs. 40,000 for the asst. yrs. 1967-68 and 1968-69, respectively, were imposed. The penalties were questioned in appeals before the Appellate Assistant Commissioner (in short ‘AAC’) who upheld the penalties levied. The matter was carried in appeals before the Tribunal. After considering the rival stands, the Tribunal came to the conclusion that there was reasonable cause for not paying the instalment in time. It was noted that while considering the case of liability for penalty under s. 140A(3) of the Act, the same was held to be not leviable and ultimately in the assessee’s own case in Addl. CIT vs. Free Wheels India Ltd. (1982) 28 CTR (Del) 85 : (1982) 137 ITR 378 (Del) : TC 9R.709, it was held that the finding regarding acceptance of reasonable cause was a finding of fact. We are of the view that the same logic also applies to a case of levy of penalty under s. 273 of the Act. Therefore, the conclusions of the Tribunal being essentially factual, no question of law is involved. Accordingly, we decline to answer the questions referred. The references are accordingly returned unanswered.

[Citation : 248 ITR 689]

Malcare WordPress Security