Delhi High Court
Escorts Electronics Ltd. vs Commissioner Of Income-Tax ... on 11 September, 2002
Equivalent citations: 100 (2002) DLT 109
Author: D Jain
Bench: D Jain, S Aggarwal
JUDGMENT
D.K. Jain, J.
1. This appeal under Section 260A of the Income Tax Act, 1961 (for short the Act) is directed against the order, dated 16 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 assessed against the levy of penalty of Rs. 70,000/- under Section 273 of the Act in respect of assessment year 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 jusitified in upholding the levy of penalty of Rs. 70,000/- under Section 273 of the Income-Tax Act, 1961?"
3. With the consent of counsel for the parties we proceed to dispose of the appeal at this stage itself.
4. Background facts, relevant for the present purpose, are that for the relevant assessment year, the assessed had filed its return of income declaring a loss of Rs. 11,76,539/-. However, the Assessing Officer 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 Assessing Officer initiated penalty proceedings against the assessed under Section 273 of the Act as the assessed had not paid advance tax. After affording an opportunity to the assessed, the Assessing Officer levied a penalty of Rs. 70,000/- under the said Section.
5. The penalty so levied was upheld by the Commissioner of Income Tax (Appeals) 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 assessed to file an estimate under Section 212 and pay the advance tax accordingly and, therefore, failure to do so makes them liable for penalty under Section 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 reasonably cause, within the meaning of Section 273(b) of the Act.
6. This is how the assessed is in appeal before us. We have learned counsel for the parties. In our view the assessed deserves to succeed in the appeal. As noticed above, the Tribunal has sustained the penalty levied under Section 273 of the Act only on the ground that the total income for the relevant assessment year, as computed by the assessing officer being Rs. 12,26,394/-, the assessed was required to pay advance tax. On the contrary the learned the stand of the assessed 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 assessed 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 ITR No. 505/1992.
Vide our separate judgment of even date in the afore-noted Income-tax Reference, we have opined that the assessed 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 nill and the assessed 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 non-payment of advance tax. In that view of the matter, we feel that it is unnecessary to go into the question as to whether the assessed had failed to furnish a statement of advance tax without any reasonably 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 favor of the assessed/ appellant.
9. The appeal stands disposed of with no order as to costs.
