Ibotombi Singh, J.
1. This reference has been made in compliance with the direction of this court under Section 256(2) of the I.T. Act, 1961 (hereinafter called 'the Act'). It arises out of the orders for penalties made for the assessment years 1958-59, 1959-60 and 1960-61. The question referred to us is :
'Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the levy of penalties of Rs. 2,530, Rs. 5,290 and Rs. 3,000 for the assessment years 1958-59, 1959-60 and 1960-61, respectively, under Section 273 read with Section 274 of the I.T. Act, 1961, was valid in law '
2. After we have heard at length learned counsel of both the parties, we were not satisfied that the statements in the case referred to us were sufficient to enable us to determine the question above. Under Section 256 of the I.T. Act, 1961, we referred back the case to the Appellate Tribunal and directed it to draw up additional statements on the following points, viz.:
' (1) Whether the incomes said to have been derived from 'quota rights' in the assessment years were derived from sale and/or purchase of the ' quota rights ' alone If so, what are the quantum of the income derived from such sale and/or purchase in each assessment year If not, whether the quota rights for the three assessment years were derived from sale/purchase of green tea leaves or tea leaves or 'any other product' which, having gone through the manufacturing process, had lost the character of being called or termed as 'tea leaves' and continued to remain as such substantially at the time of such sale/purchase ?
(2) Whether the assessee purchased quota rights in any of the assessment years If so, whether the purchases were only in respect of quota rights of green tea leaves or tea leaves or any other product which had lost the character of tea and continued to be as such substantially at the time of its purchase '
3. Pursuant to the direction of the court, the Appellate Tribunal drew up the additional statements of the case and referred the same to us. In the said additional statements, it was stated that the income derived by the assessee from sale of export quota rights represented the total sale proceeds 6? such quota rights. The said amounts of the income were as under:
4. The above amounts which represented the total sale proceeds, it was stated, had no relation whatsoever either with the purchase or sale of green leaves or any other produce of the assessee, and that the assessee-company did not manufacture any tea during all the years under reference and the green leaves produced were sold.
We have heard again learned counsel for both the parties in the light of the above additional statements, but the learned counsel for both the parties had not thrown more light than what was submitted already on the question referred to us. We proceed to consider the respective contentions of the learned counsel of both the parties.
6. The assessee is M/s. Jalannagar Tea Estate Private Ltd., Dibrugarh, and is a regular assessee. For the assessment year 1958-59, the ITO served on the assessee a notice under Section 18A(1) of the Indian I.T. Act, 1922, demanding advance tax. The assessee filed an estimate of its income on June 3, 1957, showing a loss of Rs, 6,000. The assessment was completed on a total income of Rs. 89,341. For the assessment year 1959-60, a similar demand was made and the assessee filed an estimate on June 7, 1968, showing a loss of Rs. 6,000. The assessment for that year was completed on a total income of Rs. 68,680. For the assessment year 1960-61, demand for payment of advance tax was made. The assessee filed an estimate showing its income at nil. The assessment was completed on a total income of Rs. 29,477. Thereafter, for all these years, the ITO imposed penalties of Rs. 2,530, Rs. 5,290 and Rs. 3,000 respectively under Section 273 of the Act. On appeal by the assessee, the AAC remitted the penalties holding that the provisions of Section 273 of the Act had been wrongly invoked and the guilt of the assessee had not been proved. The revenue carried the matter in appeal to the Income-tax Appellate Tribunal. The Tribunal disagreeing with the AAC held that the levy of penalties was proved and justified. It further held that the provisions of Section 297(2)(g) of the Act applied to the case. On these findings, the Tribunal set aside the order of the AAC and restored those of the ITO. At the instance of the assessee, the above question has been referred under Section 256(2) of the Act.
7. Mr. N. M. Lahiri, learned counsel for the assessee, urged that there were no materials for the ITO for his satisfaction that the assessee had furnished the estimates which it knew or had reason to believe to be untrue. Arguments advanced on behalf of the assessee were two-fold. The first was that during these years, the assessee dealt only in tea leaves and at the time when the estimates were filed, the assessee entertained a reasonable belief that the income from the sale of export quota rights was agricultural income not liable to be included for income-tax. The other contention was that the assessee honestly believed its business would not fetch more income than what had been estimated. Having so led by the circumstances prevailing there, it was stressed that the guilt of the assessee, the onus of proof of which lay on the revenue, has not been established. Accordingly, no penalty could be levied.
8. Learned counsel for the revenue submitted that the findings of the Tribunal were based on adequate materials. It was urged that the
Tribunal had rightly found that there could have been no occasion for the assessee to entertain any reasonable belief that the income, from sale of export quota rights was agricultural, because for the assessment year 1955-56, this plea taken on this score was negatived by the AAC in the appeal decided on May 26, 1956, that for that year the ITO had assessed the income from quota rights at 100%, being income earned on the sale of its own quota rights and purchase of quota rights from other parties and sale of the same to others; the assessee raised no objection to that taxation, and that for 1956-57 and 1957-58, the assessee disclosed in its returns 40% of income from the sale of quota rights.
9. In regard to the second contention, learned counsel for the revenue submitted that the Tribunal also found that the sources from which the assessee had income were available at the time when the estimates were filed ; the income from the sale of quota rights in all these three years was quite substantial; the income from interest for these years was in the knowledge of the assessee, having regard to the income in the previous years, 1953-54, 1954-55 and 1956-57, though there was no income from this source in 1955-56 ; and that despite unascertained liabilities for bonus payment, the assessee declared dividends from profits of the years 1957 and 1959, though no dividend was declared from the profits of the year 1958, showing thereby that the financial position of the assessee was quite sound. It was, therefore, strenuously urged on behalf of the revenue that taking into account all the circumstances in its entirety, the Tribunal had correctly held that the assessee knew or had reason to believe that the estimates were false. In support of his contention reliance was placed on (1) V. Damodaran v. CIT : 96ITR335(Ker) ; (2) United Asian Traders Ltd. v. CIT : 77ITR711(Cal) ; (3) Addl. CIT v. Bipan Lal Kuthiala . It was also urged that the wide disparity between the estimates and the figures of the estimate lead to the inference that the assessee had not honestly made the estimates ; that revised estimates which could be filed depending on the trend of its business towards the end of the financial year had not been filed, and that the basis on which the assessee made the estimates being unreasonable was not accepted by the ITO and the Tribunal. The cumulative effect of all these circumstances, it is contended, proved that the assessee was guilty justifying penalty. Reliance was also placed on the case of Appavoo Pillai v. CIT : 57ITR41(Mad) .
10. We consider first the principle of law to be borne in mind in such a case. It has been laid down by the Supreme Court that onus is on the revenue to show that the assessee had consciously disregarded the provisions of law to justify imposition of penalty ; an order imposing penalty for failure to carry out a statutory obligation is the result of quasi-criminal
proceedings; 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. 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. See Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) and CIT v. Anwar Ali : 76ITR696(SC) . Observation was also made by the Supreme Court in Khemka & Co. (Agencies) Pvt. Ltd. v. State of Maharashtra  35 STC 571, that the I.T. Act, 1961, imposes penalty under Section 270 and 271, and these sections in the Act provide for imposition of penalty on contumacious or fraudulent assessees. The same principle will apply to the imposition of penalty under Section 273 of the Act.
11. Section 273 of the Act provides that if the ITO is satisfied that the assessee has furnished an estimate of the advance tax payable by him which he knew, or had reason to believe to be untrue, 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 at the rates mentioned therein. It is not disputed before us that the provisions of Section 273 read with Section 297(2)(g) apply to the instant case.
12. The central question that emerges for consideration is what was the state of mind of the assessee when it filed estimates originally. In judging it, the entire circumstances of the case are to be taken into consideration. In the instant case, the explanation given by the assessee did not find favour with the ITO and with the Tribunal. As noticed above, there is a wide disparity between the estimates of the income and the finally assessed income in all the years in question. It is true that such a disparity by itself does not necessarily lead to the inference that the assessee knew, or had reason to believe, that the estimates were false. But, it is one of the
several factors on the basis of which a finding is to be arrived at on the crucial point.
13. In our opinion, an assessee who makes his estimate of advance tax
is to make an honest estimate on the basis of the materials as to the sources
of his income available with him. on the date of the estimates. The assessee is to satisfy the ITO that he had reasonable belief in making his estimate where there is a wide disparity between the estimate and the finally assessed income and that the failure to show a justification by the state of accounts on the date of the estimate bears an eloquent testimony to the contumacious conduct on the part of the assessee. We are in respectful agreement with the views of the Madras High Court in Appavoo Pillai v. CIT : 57ITR41(Mad) in this regard.
14. In the instant case, the Tribunal found that the assessee knew well all the sources of income, because the estimates were filed in the month of
June each year. The liability to tax on the income of the sale of quota rights was established at the time of the estimates. The assessee also disclosed in the returns 40% of the income from the sale of the quota rights in the years 1956-57 and 1957-58. This previous conduct on the part of the assessee is also an unimpeachable piece of evidence relevant under Section 8 of the Evidence Act as to the mens rea of the assessee.
15. Another circumstance appearing in the case which can be taken into account in the background of other factors in determining the state of mind of the assessee is its failure to file a revised estimate, though filing of such a revised estimate, under the proviso to Section 18A(2) of the Indian I.T. Act, 1922, was optional. There was no material on the record in the case before the ITO to show the spurt of its income from the known sources of income at the end to the financial year for all these years. It revealed that the assessee had not made an honest and fair estimate at the time of filing the estimate for these years. Having regard to the nature of the business, the income earned in the previous years derived from interest and declaration of dividends as discussed by the Tribunal in para. 8 of the order in appeal, annex. 'C' coupled with the other factors pointed out above, there were materials in arriving at the conclusion that the assessee knew or had reason to believe the estimates to be untrue.
16. It has been laid down by the Supreme Court in CIT v. Daulat Ram Rawatmull : 87ITR349(SC) , while approving the observation in Dhirajlal Giridharilal v. CIT : 26ITR736(SC) , that when a conclusion has been reached by the Tribunal on appreciation of a number of facts, whether it is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. In Mehta Parikh and Co. v. CIT  30 ITR 181, the Supreme Court further observed that the court would be entitled to intervene if it appears that the fact-finding authority acted without any evidence which cannot reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question. The principles of law given above have also been reiterated in the following cases; CIT v. S.P. Jain : 87ITR370(SC) and CIT v. Manna Ramji and Co. : 86ITR29(SC) .
17. Learned counsel for the assessee could not convince us by pointing out circumstances to hold the view that on the various factors pointed out above, no person acting judicially and properly instructed as to the relevant law would have come to the determination in question as held by the Tribunal. It is not permissible for us to disturb the findings of fact made by the Tribunal, and it is not open to the High Court in a reference to embark upon the reappraisal of the evidence and arrive at the findings of
fact contrary to those of the Tribunal. See Karam Chand Thapar and Bros. (P.) Ltd. v. CIT : 80ITR167(SC) ]. The levy of penalties in the case was lawfully imposed and was justified.
18. In the result, we answer the question against the assessee and in
favour of the revenue. We, however, do not pass any order regarding
K. Lahiri, J.
19. I agree.