JUDGMENT
1. The Income-tax Appellate Tribunal, Allahabad, has referred the following two questions of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this court :
"1. Whether, in law and on facts of the case, the Income-tax Appellate Tribunal was justified in confirming the Commissioner of Income-tax (Appeals) order cancelling the penalty of Rs. 37,970 imposed under Section 273(a) of the Income-tax Act, 1961, by the Income-tax Officer ?
2. Whether, in law and on the facts of the case, the Tribunal was justified in holding that all payments within the financial year 1975-76 should be taken into account for levy of penalty under Section 273(a) even if they were made in pursuance of an invalid estimate filed on March 15, 1976 ?"
2. Briefly stated the facts giving rise to the present reference are as follows :
The assessment year involved is 1976-77. The respondent which is a public limited company was asked by the Income-tax Officer by way of notice dated April 25, 1975, for payment of advance tax of Rs. 3,79,701. The respondent filed its estimate in Form No. 29 on September 8, 1975, showing advance tax payable at Rs. 3,45,000. Another estimate of advance tax was filed on March 15, 1976 showing tax at Rs. 6,93,000. Since the estimate filed on March 15, 1976, was late it was treated as invalid and the estimate filed on September 8, 1975, was taken into consideration at the time of the assessment. The income which was disclosed by the respondent at Rs. 17,04,580 was enhanced to Rs. 22,04,760 as a result of an order passed under Section 263 of the Act by the Commissioner of Income-tax. The Income-tax Officer initiated proceedings for imposition of penalty under Section 273(a) of the Income-tax Act on the ground that the respondent had filed statement of advance tax payable by him which he had reason to believe to be untrue. As the tax paid by the respondent fell short of 75 per cent. of the assessed tax, he imposed a sum of Rs. 37,970 as penalty. The respondent preferred an appeal before the Commissioner of Income-tax (Appeals) who deleted the penalty which order has been affirmed by the Tribunal.
3. We have heard Shri A.N. Mahajan, learned standing counsel for the Revenue and Shri R.S. Agrawal, learned counsel for the respondent. Learned counsel for the Revenue submitted that as the respondent had filed an incorrect and untrue estimate of advance tax, the penalty had rightly been imposed. The submission is misconceived. Under Section 273(i) of the Act penalty has been provided for filing false estimate or failure to pay advance tax. The relevant provision reads as follows :
"(2) If the Income-tax Officer, in the course of any proceedings in connection with the regular assessment for the assessment year commencing on the April 1, 1970, or any subsequent assessment year, is satisfied that any assessee--
(a) has furnished under Section 212 an estimate of the advance-tax payable by him which he knew or had reason to believe to be untrue, or
(b) has without reasonable cause failed to furnish an estimate of the advance-tax payable by him in accordance with the provisions of Sub-section (3) of Section 212, or
(c) has without reasonable cause failed to furnish an estimate of the advance-tax payable by him in accordance with the provisions of Sub-section (3A) of Section 212, he may direct that such person shall, in addition to the amount of tax, if any, payable by him, pay by way of penalty a sum--
(i) which, in the case referred to in Clause (a), shall not be less than ten per cent. but shall not exceed one and a half times the amount by which the tax actually paid during the financial year immediately preceding the assessment year under the provisions of Chapter XVIIC falls short of--
(1) seventy-five per cent. of the assessed tax as defined in Sub-section (5) of Section 215, or (2) where a notice under Section 210 was issued to the asses-see, the amount payable thereunder, whichever is less ;
(ii) which, in the case referred to in Clause (b), shall not be less than ten per cent. but shall not exceed one and a half times of seventy-five per cent. of the assessed tax as defined in Sub-section (5) of Section 215 ; and
(iii) which, in the case referred to in Clause (c), shall not be less than ten per cent. but shall not exceed one and a half times the amount by which the tax payable under the notice issued to the assessee under Section 210 falls short of seventy-five per cent. of the assessed tax as defined in Sub-section (5) of Section 215."
4. From a reading of the aforesaid provisions it appears that even where an estimate of advance tax has been incorrectly filed or is untrue, the quantum of penalty is to be calculated with reference to the tax paid during the financial year immediately preceding the year which falls short of 75 per cent. of the assessed tax or the amount of tax payable where the notice under Section 210 was issued to the assessee, whichever is less. In the present case it is not in dispute that the amount of tax deposited by the respondent did not fall short of 75 per cent. of the assessed tax and therefore no penalty was leviable. In this view of the matter the order of the Commissioner of Income-tax (Appeals) deleting the penalty does not suffer from any legal infirmity.
5. For calculating the amount of tax paid during the year, the entire amount of advance tax whether it has been paid in time or after the due date but not after the close of the financial year has to be taken into consideration.
6. In view of the foregoing discussion, we answer the questions of law referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.