Prem Chand Jain, J.
1. The Income-tax Appellate Tribunal, Chandigarh Bench, on the application of the applicant, has referred the following question for our decision :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law, in holding that penalty under Section 273(1)(b) was exigible ?'
2. Abhilash Kumari Oswal (hereinafter referred to as 'the assessee'), an individual, derives income from partnership in the firm of M/s. Oswal Hosiery Factory (Managing Agency), speculation, interest on securities and other sources. The assessee had not previously been assessed by way of regular assessment as provided under Section 212(3) of the I.T. Act, 1961 (hereinafter referred to as 'the Act'). The previous year for the assessment year 1965-66 ended on 31st March, 1965. If the total income of the assessee exclusive of capital gains for the previous year under consideration was likely to exceed the maximum amount not chargeable to income-tax in her case by Rs. 2,500, then before 1st day of March, 1965, she was required to furnish, (i) an estimate of the total income exclusive of capital gains of the said previous year ; and (ii) an estimate of advance tax payable by her calculated in the manner laid down in Section 209 of the Act. She was also required to pay the amount of advance income-tax in accordance with the aforesaid estimate on the dates specified in Section 211 of the Act. Though, according to her own return of income, her total income amounted to Rs. 65,025, she did not file any estimate under Section 212(3). Consequently, penalty proceedings under Section 273(1)(b) of the Act were initiated, when the assessment was completed on 18th March, 1970, on a total income of Rs. 82,772. The income assessed included speculation income of Rs. 35,314; share of profit from Oswal Hosiery Factory (Managing Agency)--Rs. 29,394 and income from other sources being unexplained investment in National Plan Certificates--Rs. 15,000.
3. In response to the show-cause notice, the assessee pleaded that the approval of the changed partnership was received from the Company Law Board, vide its letter dated 26th April, 1965, that though she was admitted as a partner in the aforesaid firm, yet her admission as a partner was subject to the approval by the Company Law Board, that she became an absolute partner with effect from 26th April, 1965, and that the share income from the aforesaid firm could not be included in the estimate under Section 212(3) of the Act. It was further pleaded that she had returned speculation income of Rs. 34,797, out of which only Rs. 3,426 was received on 25th April, 1964, from M/s. Murari Lal Naresh Kumar, Delhi, and the balance profit of Rs. 31,371 was received from the other Delhi arhatias, vide their bills dated 3rd March, 1965, and 13th March, 1965, which could not be included in the estimate of advance tax. In view of these facts, it was explained that the non-filing of the estimate under Section 212(3) of the Act was not without a reasonable cause. The ITO was not satisfied with this explanation. Consequently, a penalty of Rs. 4,132 was imposed on the assessee.
4. Feeling aggrieved from the order of the ITO, the assessee preferred an appeal, but failed. Still dissatisfied, a further appeal was filed before the Tribunal. On a consideration of the entire matter, the Tribunal rejected the plea of the assessee that without receiving the approval of the Company Law Board for the change in the constitution of the managing agency firm, she could not treat the amount receivable as her share income from the managing agency firm as her income. With regard to the speculation income, the Tribunal observed that the transaction with M/s. Lalit Kumar and Sons was completed during the month of December, 1964. The Tribunal further opined that the amount of Rs. 13,800, which was finally received from M/s. Thakur Dass Naresh Kumar, was not earned prior to 1st March, 1965, that the assessee might have had some doubt in her mind, but that doubt itself did not absolve the assessee from filing an estimate under Section 212(3) of the Act. Consequently, the Tribunal found that penalty under Section 273(1)(b) was correctly imposed. However, on a consideration of certain extenuating circumstances, only minimum penalty was ordered to be levied.
5. As earlier observed, the assessee filed an application under Section 256(1) of the Act, requiring the Tribunal to refer to this court certain questions of law said to arise out of its order dated 5th December, 1975, and that is how the question reproduced in the earlier part of the judgment, has been referred for our decision.
6. It may be observed at the outset that Mr. B. S. Gupta, learned counsel for the petitioner, very fairly conceded at the Bar that in case the view taken by the Tribunal is upheld with regard to the speculation income, then it would not be necessary to decide the question, whether the assessee could be deemed to be the partner in the firm before the receipt of the approval by the Company Law Board.
7. So far as the speculation income is concerned, the Tribunal has found as a fact that the transaction with M/s. Lalit Kumar and Sons was completed during the month of December, 1964. That being so, the assessee knew that she was to receive her share of profit. So far as the transaction with M/s. Thakur Dass Naresh Kumar is concerned, Mr. B. S. Gupta, learned counsel for the petitioner, laid great stress on the letter dated 26th April, 1965, wherein it has been written that the assessee was likely to incur a loss of Rs. 16,000 to Rs. 17,000. As the facts stand, this letter is of no help to the assessee, as she had not brought any material on the record to prove the date on which the transaction was settled, as a result of which she had received profit from M/s. Thakur Dass Naresh Kumar, on 15th March, 1968. The Tribunal, on the material available on the record, has rightly held that penalty under Section 273(1)(b) of the Act was exigible. Consequently, the question referred for our decision is answered in the affirmative, i. e., in favour of the Revenue and against the assessee. However, in the circumstances of the case, we make no order as to costs.