Y.V. Anjaneyulyu, J.
1. For the assessment year 1974-75, the assessee's previous year ended on May 31, 1973. The Income-tax Officer required the assessee to pay advance tax of Rs. 1,54,254 under section 210 of the Income-tax Act. On June 13, 1973, the assessee filed an estimate under section 212 of the Act estimating the income for the assessment year 1974-75 at Rs. 8,00,000 and the corresponding advance tax payable thereon at Rs. 2,04,378. The instalment due in the month of June, 1973, was, accordingly, paid to the extent of Rs. 68,126.
2. On September 13, 1973, the assessee filed a revised estimate under section 212 of the Act wherein the income declared was Rs. 3,00,000 and the corresponding advance tax payable was shown as Rs. 66,378. As the assessee had already paid the first instalment of tax of Rs. 68,126 which was more than the tax payable on the basis of the revised estimate dated September 13, 1973, no further instalment was paid in September 1973.
3. We may, at this stage, refer to a fact mentioned before this court by learned counsel that the reason for reducing the estimate of income in the revised estimate filed on September 13, 1973, was that the assessee was trying to convert the partnership firm into a company with consequent changes in the levy of taxes, etc. Be that as it may, the fact remains that the revised estimate filed on September 13, 1973, showed an estimate of income which was far less than the income shown in the first estimate dated June 13, 1973.
4. Eventually, in December, 1973, the assessee found that it would be expedient to pay the advance tax on the basis of the first estimate filed in June, 1973. Accordingly, yet another revised estimate under section 212 of the Act dated December 14, 1973, was filed on December 15, 1973. In this estimate, the income for the purpose of advance tax was shown at Rs. 8,00,000 and the corresponding advance tax a little over Rs. 2,04,000. A cheque dated December 14, 1973 for the balance of tax of Rs. 1,36,352 was sent to the Income-tax Officer along with the revised estimate and was received by the Income-tax Officer on December 15, 1973.
5. The Income-tax Officer felt that the revised estimate of advance tax dated December 14, 1973, filed on December 15, 1973 should be treated as non est in law, as according to the Act, the estimate has to be filed before the last date for payment of the instalment. In the present case, the last date for payment of the instalment was December 15, 1973, and, therefore, the Income-tax Officer thought that the assessee should have filed its estimate of advance tax not later than December 14, 1973. The estimate filed a day later on December 15, 1973 was, therefore, disregarded. So also the payment of Rs. 1,36,352 made through a cheque delivered to the Income-tax Officer on December 15, 1973, was disregarded. The Income-tax Officer was then confronted with the revised estimate filed on September 13, 1973, and he was of the opinion that that estimate was untrue to the knowledge of the assessee. He, accordingly, initiated proceedings for the levy of penalty under section 273(a) of the Act and levied a penalty of Rs. 10,935. On appeal by the assessee, the penalty levied by the Income-tax Officer was confirmed by the Commissioner of Income-tax (Appeals). On further appeal, the Income-tax Appellate Tribunal also confirmed the order levying penalty. It is in these circumstances that the assessee sought for a reference under section 256(1) of the Income-tax Act and the following questions of law were referred for the consideration of this court :
' (1) Whether, having regard to the words 'at any time before the last instalment of advance tax is due' in section 212(1) of the Income-tax Act, 1961, the Appellate Tribunal was correct in coming to the conclusion that the last date for filing the revised estimate would be December 14, 1973
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the revised estimate filed on December 15, 1973, was a belated one and not valid
(3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the payment of the last instalment was not a payment made under Chapter XVIIC of the Act
(4) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in coming to the conclusion that there is dishonesty in the conduct of the assessee to confirm the levy of the penalty '
6. We have set out the facts in full detail which would indicate that the penalty in this case has been levied on hyper-technical grounds. It may be true that the estimate dated December 14, 1973, reached the office of the Income-tax Officer a day late. It could be for more reasons than one. But then the fact remains that the instalment of advance tax was paid on the due date on December 15, 1973.
7. It may be pointed out that, under the Treasury Rules, when cheques are handed over to the Government officials or the Government officers authorised to receive payment on behalf of the Government, payment would be deemed to have been made on the date the cheque was handed over. The fact that the cheque so delivered was encashed a few days later is totally immaterial. Please see the decisions in Oswal Woollen Mills Ltd. v. CIT and CIT v. Kumudam Publications (P.) Ltd. : [1981]128ITR617(Mad) . Applying this principle, it must be held in the present case that the assessee paid the advance tax instalment of Rs. 1,36,352 on December 15, 1973, itself which was the due date because, admittedly, the cheque was delivered to the Income-tax Officer authorised to receive the payment on that date. Having disregarded the estimate of advance tax filed on December 15, 1973, to be outside the date prescribed, the Income-tax Officer took into consideration the estimate of advance tax filed on September 13, 1973. The Income-tax Officer's case was that the estimate filed on September 13, 1973, was an underestimate and the assessee knew or had reason to believe the estimate to be untrue. Under such circumstances, section 273(1)(i) provides that penalty leviable shall be not less than 10% but not exceeding 1 1/2 times the amount by which the tax actually paid during the financial year immediately preceding the assessment year under the provisions of Chapter XVII-C fell short of 75% of the assessed tax, as defined in sub-section (5) of section 215 of the Act. In the present case, for the purpose of reckoning the penalty leviable, the Income-tax Officer disregarded the amount paid through cheque on December 15, 1973, obviously on the ground that it was not paid under Chapter XVII-C relating to payment of advance tax.
8. Having given our careful consideration to the matter in dispute, we are firmly of the view that the amount of Rs. 1,36,352 paid by the assessee on December 15, 1973, cannot be regarded as anything but payment of advance tax under Chapter XVII-C of the Act. Under section 209 of the Act, advance tax is payable by the assessee in the financial year. Under section 211, advance tax is payable in equal instalments on the 15th day of June, 15th day of September and the 15th day of December or the 15th days of September, 15th day of December and the 15th day of March, as provided in clauses (i) and (ii) of section 211(1) of the Act. The assessee filed a revised estimate under section 212 of the Act dated December 14, which unfortunately reached the Income-tax Officer a day late on December 15. The sum of Rs. 1,36,352 was paid in accordance with the aforesaid estimate on December 15, as we have already pointed out. The Income-tax Officer seems to have come to the conclusion that the amount Rs. 1,36,352 paid by the assessee cannot be regarded as advance tax, firstly, because the cheque received by him was realised subsequent to December 15, and could not, therefore, be treated as payment of advance tax; secondly, the revised estimate with reference to which the instalment of tax was paid was received a day late and for that reason also the amount paid could not be regarded as payment of advance tax under Chapter XVII-C. Our attention has not be drawn by learned standing counsel for the Revenue to any specific provision in Chapter XVII-C which provides that advance tax cannot be paid without filling a corresponding estimate under section 212 of the Act. The Act has provided consequences for failure to file an estimate of advance tax, such as, levy of interest under section 217 and levy of penalty under section 273. But is does not appear that there is any provision to support the argument that the instalment of advance tax paid on the due date can be disregarded on the ground that it was paid without filling an estimate of advance tax. We have earlier referred to the provision contained in section 209 which provides that the amount of advance tax is payable by an assessee in the financial year, which lends support to the contention of Mr. Parvatha Rao that, even if the advance tax instalment is not paid on the due date, it should be taken into account if it is paid during the financial year preceding the assessment year. Taking into consideration the fact that the assessee had in fact filed an estimate under section 212 on December 15, and also paid the instalment of advance tax on the same day, we consider that there is compliance on the part of the assessee with the provisions of law. The amount of tax actually paid by him on December 15, 1973, should be regarded as payment of advance tax under Chapter XVII-C, and it must, accordingly, be taken into account for the purpose of quantifying the penalty, if any, leviable under section 273(1)(i) of the Act. There is no dispute in the present case that, if this sum of Rs. 1,36,352 paid on December 15, 1973, is regarded as payment of advance tax under Chapter XVII-C, then no penalty will be leviable in terms of section 273(1)(i) of the Act, although technically penalty may be leviable, if the estimate dated September 13, 1973, filed by the assessee is considered as an untrue estimate within the knowledge of the assessee. We, therefore, hold that, in the facts and circumstances of the case, no penalty is exigible under section 273(1)(a) of the Act.
9. We must express our unhappiness that, in a case like this, the Revenue should have levied penalty. We may point out that the Income-tax Officer is under no compulsion to levy a penalty either under section 271 or section 273 of the Act. Whether penalty is to be imposed under either of the above provisions, is a matter of discretion as far as the Income-tax Officer is concerned. We may quote below the observations of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa : [1972]83ITR26(SC) .
'An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. '
10. In the present case, the revised estimate dated December 14, 1973, filed be the assessee was disregarded on the technical ground that it was filed a day late on December 15, 1973. Apparently, the delay was only in the transmission of the estimate form by the assessee to the Income-tax Officer. The assessee made a substantial tax payment of Rs. 1,36,352 on December 15, 1973. This payment was disregarded on the ground that it is not advance tax paid under Chapter XVII-C of the Act. Assuming that the Income-tax Officer is right in relying on the above technicalities, it does not automatically follow that the Officer should impose a penalty as if the assessee acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct or that he acted in conscious disregard of his obligation. The Income-tax Officer should have taken note of the fact that, notwithstanding the hyper-technical view entertained by him, the assessee acted fairly and honestly in filling a revised estimate and in paying a substantial amount of tax. Taking note of these two facts, the Income-tax Officer should have held that have held that even if penalty is leviable under law, he would refuse to levy penalty because there is only a technical or venial breach of the provisions of the Act. It is unfortunate that the observations of the Supreme Court in the above mentioned case were ignored by the Income-tax Officer and penalty of the substantial sum was imposed although the assessee had acted honestly and fairly. The Income-tax Officer acted unreasonable and arbitrarily and put the assessee to avoidable inconvenience and hardship.
11. Having regard to what we have stated above, we answer the questions referred in the affirmative, that is to say, in favour of the assessee and against the Revenue. The Commissioner shall pay the assessee's costs. Advocate's fee Rs. 500.