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In a case before the Bombay High Court of CIT v. Sulphur Refinery (P.) Ltd. (105TAX400) the assessee had filed an estimate of loss. However, profits accrued subsequently when the assessing officer held that the estimate filed by the assessee was malafide and unreal who then levied a penalty u/s 273. Following its earlier ruling in the case of Hind Products Pvt. Ltd. V. CIT (121ITR903) the Court reaffirmed its view that an incorrect or inaccurate view or approximation of the trend of the business in the future will not necessarily make the estimate with regard to income an untrue one.

In such cases the assessee is expected to bring on record the material on which he has bases his estimate to escape from the levy of penalty u/s 273 for any alleged false estimate or failure to pay advance tax. In the context of the substituted law under sections 234A,Band C for levy of mandatory interest the CBDT by way of a notification provided for a remedy to escape from such levy upon filing of a waiver petition in appropriate cases and circumstance to the Chief Commissioner of Income tax. In such cases the assessee is similarly expected to bring the relevant material on record to prove his bonafide.

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