Per Shri P. J. Goradia, Accountant Member - This is an appeals filed by the revenue on the following ground :
'On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in cancelling the penalty of Rs. 15,760 levied under section 273(2) (c) of the Income-tax Act, 1961 ?'
2. The facts in brief stated are as follows :
The assessee filed statement of loss of Rs. 3,199 in Form No. 28A of the Income-tax Act, 1961 (the Act) on 14-6-1978. Since the assessed income as Rs. 3,01,540, the ITO initiated penalty proceedings under section 274/273(2) (c) of the Act. It was submitted that because of accumulated losses and unabsorbed allowances amounting to Rs. 28,897 and because the accounts of the company were required to be audited, they were not available till 1-9-1979, etc., the revised estimate could not be filed. Rejecting the submission of the assessee the ITO levied penalty of Rs. 15,760 by observing that it is statutory liability of the assessee to file the estimate/statement of its total income if the current income is likely to exceed the sum specified under section 208(2) of the Act. Further the reasons given by the assessee have nothing to do with filing of the estimate and by 15-12-1978 the company had information that there was specific income. He levied minimum penalty of 10 per cent.
3. On appeal, the Commissioner (Appeals) deleted the penalty by observing that failure to revise the estimate was due to circumstances beyond the control of the assessee and there was nothing on record to prove that the statement filed on 14-6-1978 was then untrue estimate. Relying upon the decision of the Bombay High Court in Hind Products (P.) Ltd. v. CIT : 121ITR903(Bom) and on the decision of the Supreme court in Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) he came to the conclusion that penalty was not leviable.
4. At the time of hearing, the learned departmental representative submitted that no bona fide cause for not filing the estimate as provided under section 209A (4) of the Act was shown by the assessee. There is provision in the Act that in case the assessee is unable to file the revised estimate in time it could apply to the Commissioner for necessary extension, etc. Besides, the accounting year of the company is calendar year. The assessee could have prepared the necessary details at the time of filing of the estimate as also for the purpose of filing the revised estimate by 15-12-1978. He further relied upon the observations of the High Court in the decisions cited by the observations of the High Court in the decision cited by the Commissioner (Appeals) at page 904 and submitted that no necessary particulars were prepared by the assessee to prove its case.
5. On behalf of the assessee initially the submission were made on the very basis of applicability of section 209A (4). Section 209A having been introduce in June 1978 and the changes not having been properly appreciated the assessee could not be charged with the default. Besides, under section 209 the computation of advance tax was based on latest assessment which in this case was a los. Even the alternative requirement in respect of self-assessment tax being higher in respect of years subsequent to the latest year for which the assessment is completed was not applicable to the facts of the case of the assessee. Therefore what was required to be seen as per the position on 14-6-1978 according to which the statement was of loss though prepared correctly was, in fact, absorb statement because liability as per the statement for payment of advance tax was not at all there. It was, therefore, submitted that the case of the assessee was not covered by any of the three sub-sections of section 209A. Since this was, so, even sub-section (4) did not apply. Even otherwise since the original advance tax payable was nil its component of 33 1/3 per cent would also be nil and, therefore, on this account also the case of the assessee had not within the provisions of section 209A (4).
6. We have considered the submission and arguments advanced by both the parties.
7. Section 209A was introduced by the Finance Act, 1978 with effect from 1-6-1978. Under sub-section (1) liability to pay the tax is fastened on every person if his current income is likely to exceed the amount specified under section 208(2). Therefore, if an assessee estimates that his current income is likely to exceed the amount so specified (Rs. 2,500 in case of company) under sub-section (2) of section 208, the person is required to send to the ITO statement of advanced tax payable. The statement of advance tax payable. The statement of advance tax payable is to be computed in the manner laid down in section 209. Section 209 tells us how to compute advance tax payable on the basis of latest regular assessment or on the basis of self-assessment tax in respect of the latest assessment year in case the assessee is a regular assesse. Therefore, statement of advance tax filed by the assessee in Form o. 28A as per rule 38A of the Income-tax Rules, 1962, on the basis of which regular assessment had bee made for the assessment year 1977-78 on 9-12-1977 was the correct estimate. In this connection, it will be useful to refer the case of CIT v. Ranchhoddas Karsondas : 36ITR569(SC) . While dealing with the argument that voluntary return showing below taxable limit was not valid return, their Lordships stated that 'it difficult to understand how the existence of return could be ignored once it had been filed. No doubt it is futile for a person not liable to tax to rush with return, but the return, in law is not a mere scrap of paper. It is a return, such as the assessee considers represents his true income'. What is to be appreciated is not the amount of advance tax payable as per Form No. 28A but important words It his current income is like to exceed the amount specified in sub-section (2) of section 208 as embodies in sub-section (1) of section 209A. Therefore, only those persons will file statement of advance tax payable in Form No. 28A, who think that the current income is likely to exceed the taxable limit. Therefore, statement filed by the assessee was strictly in consonance with the provisions of section 209(A) (1) and not in absurdity as contended by the learned counsel. Since section 209(A) (1) was properly complied with by the assesse, sub-section (4) of section 209A was also applicable to the assessee. Therefore, the first limb of the argument of the learned counsel that section 209A (1) was not applicable, is rejected.
8. Coming to the second limn of the argument that even otherwise because the advance tax payable as per Form No. 28A was nil the multiple of the same would be nil under sub-section (4) of section 209A. This sub-section requires the assessee to file a higher-estimate of advance tax if by reasons of the current income being likely to be greater than the income on which advance tax is computed (in this case as per Form No. 28A). The sub-section fastens the liability on the assessee by stating that even for any other reason the advance tax payable on the basis of estimated current income exceeds by more than 33 1/3 per cent. Therefore, what is required, as first step, is to take the amount of advance tax payable in this case as per Form No. 28A filed on 14-6-1978 as Rs. nil. Then on second step, find the tax payable as per the estimated current income nor before 15-12-1978. On third step, make comparison as to whether the amount of the advance tax payable as per second step is higher by 33 1/3 per cent of the amount payable as per the first step; if so, then take the figure arrived on second step. In this case, the amount payable in first step was nil. Then, suppose making computation as per second step, if the tax payable on estimated current income came to Rs. 2 lakhs, then certainly the result at figures in the third step would be Rs. 2 lakhs because what you are required to do is companion of the the payable on two points of time in this case on 15-6-1978 and on 15-12-1978. Therefore, even if nil advance tax is payable on 15-6-1978 there could be a case when advance tax might become payable on 15-12-1978 under section 209A (4). Therefore, the second limb of the contention of the counsel is also rejected.
9. Above position would be quite clear if little more enlightened approach is adopted. Because it cannot be the law that while the provision would apply to almost all the assessees to file a revised estimate because of higher income, there can ever be an exception sought to be kept unless specifically stated in this section itself. It is the rule of construction that in determining either the intent of the Legislature or the meaning of its language in any particular section, the intention which appears to be most in accord with reason, justice and legal principles should, in all cases of doubtful significance, be presumed to be true one. An intention to produce an unreasonable reason is not to be imputed to statute if there is some other construction available. Even if it is necessary to do some violence to the words to achieve the obvious intention and to produce a rational construction, it must be done. Literal application which would defeat the very purpose has to be avoided. This will be in the interest of administrative justice, beneficial to all.
10. Coming to the aspects of the merits of the case though it was not vehemently argued by the learned counsel, it appears that the fact of the case carry some healthy points in favour of the assessee. What is required for the levy of the penalty is the presence of guilty mind and in this case the onus of proving the guilty mind existed at the relevant time is upon the revenue and the same has not been fully discharged. The revenue has also not brought to our notice any facts as to whether the assessee is habitual defaulter in complying with the requirements of law. For non-filing of the revised estimate and non-payment of advance tax recoupment in respect of loss of revenue must have been already made under the applicable provision embodies in Chapter XVII of the Act. Therefore, it is required to be proved by the revenue beyond doubt that mens rea was present. The case of the assessee would be covered by the decisions relied upon the Commissioner (Appeals). On this aspect of the matter we fully uphold the conclusion of the Commissioner (Appeals) in paragraph 4 of his order and hold that no intereference is called for in the decision of Commissioner (Appeals).
11. In the result, the appeal is dismissed.