Sabyasachi Mukharji, J.
1. This reference arises out of the orders for penalties made for the assessment years 1959-60 and 1960-61. The assessee, United Asian Traders Ltd., is a company whose accounting year is the financial year ending 31st of March. For the assessment year 1959-60 the Income-tax Officer served a notice on the assessee under Section 18A(1) of the Indian Income-tax Act, 1922, demanding advance tax of Rs. 18,372 some time in the beginning of the month of June, 1958. On or about 15th June, 1958, the assessee filed an estimate under Section 18A(2) of the Act showing nil income for the accounting year 1958-59 and also showing the advance tax payable as nil. The assessee's income-tax return was filed on the 30th November, 1959, disclosing a total income of Rs. 10,763. The assessment for that year was completed on the 29th of December, 1961, determining the assessee's total income at Rs. 17,059. For the assessment year 1960-61 a notice of demand for advance tax for a sum of Rs. 7,568 was served on the assessee on the 27th May, 1959. On the 8th July, 1959, the assessee filed an estimate under Section 18A(2) of the said Act showing its income during the accounting year 1959-60 as nil and the advance tax payable as nil. The income-tax return for this year was filed on the 19th May, 1961, disclosing a total income of Rs. 10,567. The assessment for this year was completed on a total income of Rs. 12,974. The Income-tax Officer, thereafter, issued notices on the assessee under Section 18A(9)/28(1)(c) of the Indian Income-tax Act, 1922, and, after giving the assessee an opportunity, imposed penalties of Rs, 2,100 and Rs. 1,400, respectively, for the years 1959-60 and 1960-61. In the order of the Income-tax Officer for the year 1959-60 he had stated: 'I have seen the ledger of the assessee and I find that he was throughout the year in the knowledge of the fact that he would receive at least Rs. 5,420 by 31st March, 1959, on account of refunds representing price of excess goods 'supplied to foreign buyers.' Similar observations appear in the order made for the year 1960-61.
2. The assessee preferred appeals before the Appellate Assistant Commissioner. It was contended before the Appellate Assistant Commissioner that the assessee's business was dealing in jute and hemp, and the fluctuation in prices of these commodities being very heavy, it was not possible to predict what would be profit or loss of the business at the end of the year. It was submitted that on the dates, namely, June, 1958, and July, 1959, when the the assessee had submitted the estimate under Section 18A(2) of the Act, the assessee's account showed business losses and the assessee had no reason to expect that there would be a profit at the end of the year for either of these two years. Therefore, it was contended that there was no reason for the Income-tax Officer to be satisfied that the assessee had furnished the estimates which it knew or had reason to believe to be untrue. The Appellate Assistant Commissioner was unable to accept the contentions of the assessee. In the order for the year 1959-60, the Appellate Assistant Commissioner observed as follows :
'In the course of the appeal proceedings in response to a specific question it was submitted that the basis on which this estimate was submitted on 16th June, 1958, was not known or was not available. A statement of the purchase and sale transactions in jute and hemp was submitted. According to this statement the jute business showed a loss of about Rs. 1,863 up to 15th June, 1958. The hemp business showed a loss of about Rs. 12,000 on 15th June, 1958.'
3. Similar observations appear in the order for the assessment year 1960-61. The Appellate Assistant Commissioner further was of the view that as the assessee did not file any revised estimate under the proviso to Section 18A(2) at any time upto 15th of March, 1959, or 15th of March, 1960, when the assessee would have known the probable results of its trading for the respective accounting years showed that the assessee had no genuine desire to file a correct estimate of its profits for either of these two accounting years. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer.
4. There was a further appeal before the Tribunal where it was contended that the assessee was entitled to file its estimates of income at any time under Section 18A(2) of the Indian Income-tax Act, 1922. There was no obligation on the assessee to wait till the end of the accounting year before filing its estimate under that Sub-section. The proviso only gave the assessee an option to file a revised return at any time before the 15th of March of the next year. As, in this case, the assessee made estimates of its business results in the months of June and July and according to the state of accountant that time, the assessee had reasonable grounds for estimating the trading results to be losses for each of these years, it was contended that the assessee could have no reason to believe that its estimates were not true or correct. It was further contended that in the assessee's business of export in jute and hemp to foreign buyers credit and debit notes were received by the assessee in respect of these shipments. In the first year it appears that the assessee received credit notes to the extent of Rs. 13,410 and debit notes of Rs. 3,647 after 31st of March, 1959, resulting in a profit of about Rs. 10,000. It was urged that this explained the assessee's returned income of Rs. 10,763. It was further urged that if the balance of these credit and debit notes received after the end of the year was not brought into account, the assessee's trading results would have been a loss and the assessee's estimate would have been confirmed. In respect of the second year, the balance of credit notes over the debit notes received after 31st of March, 1960, was brought into account for the year ending on that date amounting to Rs. 26,400 and it was explained that if this amount was left out of the assessee's trading for that year that would have disclosed a loss and the estimate would have been correct. The Tribunal was unable to accept these contentions of the assessee. The Tribunal was of the opinion that, if the assessee's contention was that the nature of the business it carried on was so uncertain that it was not possible to predict the ultimate trading results at any point of time, then it was not possible for the assessee to make an estimate of the profit or loss for the whole year bona fide right at the beginning of the accounting year. In those circumstances, it could not be said, according to the Tribunal, that the assessee had reason to believe such estimates to be correct and true. So far as the credit and debit notes were concerned the Tribunal held that the assessee must have been in a position to know by the 15th of March of the subsequent year what amount of credit notes and debit notes it was going to receive for the year ending on the 31st of March. The actual amount due on such notes, according to the Tribunal, might have been received subsequently but the assessee must have had information as to the amount of such notes which he would receive for that year. In spite of this, the assessee did not file any revised return by the 15th of March. Taking these facts into consideration the Tribunal upheld the orders imposing penalties passed in this case.
5. The following question has been referred to this court under Section 66(1) of the Indian Income-tax Act, 1922 :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the penalties imposed under Section 18A(9)/28(1)(c) of the Indian Income-tax Act, 1922, on the assessee in respect of the assessment years 1959-60 and 1960-61 ?'
6. On behalf of the assessee learned counsel, Mr. S. K. Banerjee, contended before us that Section 18A(9) of the Indian Income-tax Act, 1922, is in the nature of a penal provision and the revenue has to establish the conditions laid down therein before invoking the provisions of the Section. The burden lies upon the revenue to prove that the conditions laid down therein were satisfied before an order could be made. The learned counsel relied on the decision in the case of Commissioner of Income-tax v. Gangadhar Banerjee & Co. (Private) Ltd., : 57ITR176(SC) , and the decision of this court in the case of Commissioner of Income-tax v. Anwar Ali,  65 I.T.R. 95 (Cal.). Mr. Banerjee then submitted that, in view of the fact that these credit and debit notes were received after the 31st of March, it was not possible to include in the estimates that were originally filed the amount received by his client by these credit notes. According to him, without these credit notes the estimates made by his client were proper and correct. He further submitted that the assessee had no obligation to file a revised return and failure to file a revised estimate would not establish that at the time when the original estimates were filed either the assessee knew that the estimates were false or that he had reason to believe that the estimates were not true. Reliance was placed by the learned counsel on the decision in the case of P. V. Kurian v. Income-tax Officer, Ernakulam,  43 I.T.R. 432 (Ker.) and the decision in the case of P. Arunachala Mudaliar v. Commissioner of Income-tax,  50 I.T.R. 36 (Mad.).
7. Under section 18A(9) of the Indian Income-tax Act, 1922, if the Income-tax Officer in the course of any proceedings in connection with the regular assessment is satisfied that any assessee has furnished estimates of tax payable by him which he knew or had reason to believe to be untrue, then, in that case, the assessee shall be deemed to have deliberately furnished inaccurate particulars of his income and the provisions of Section 28 can be applied. Section 28 of the Indian Income-tax Act, 1922, is a section dealing with penalty for concealment of income or improper distribution of profit. Clause (c) of Section 28(1), which is the material Clause here, authorises the Income-tax Officer or the Appellate Assistant Commissioner or the Tribunal if they are satisfied that an assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of income, to take proceedings under Section 28, It has been held that under Section 28 there are two ingredients, that is to say, (1) there is to be proved concealment or deliberate furnishing of inaccurate particulars, and (2) it is to be proved that the concealment or deliberate furnishing of inaccurate particulars is with regard to income. It has been held that on both these points the onus is on the revenue to establish that the assessee has concealed his income or has deliberately furnished inaccurate particulars regarding the same. It is to be borne in mind that under Section 18A(9) of the statute an assessee is deemed to have deliberately furnished inaccurate particulars, if the Income-tax Officer is satisfied that the assessee has furnished an estimate which he either knew to be untrue or had reason to believe to be untrue. In this case, therefore, it is necessary for us to examine whether there were materials before the Income-tax Officer to be satisfied that the assessee had filed estimates which the assessee either knew to be untrue or had reason to believe to be untrue.
8. It is, therefore, appropriate to bear in mind the nature of the assessee's business according to the assessee. The Tribunal in its order at page 21 of the paper book records as follows :
'It was contended that the main business of the assessee is export in jute and hemp to foreign buyers. In the case of such exports credit and debit notes are received by the assessee in respect of the shipment.'
9. Again, it has been observed :
'It was contended that, in this case, having accepted that the assessee's business was subject to heavy fluctuation in prices, the Income-tax Officer was not justified in holding that the assessee submitted an estimate which it knew or had reason to believe to be untrue.'
10. Therefore, the assessee's business was of such a nature according to the assessee that it was difficult to predict the ultimate trading result. It also appears that the receipt of credit notes after the end of the year was also a normal incident of the assessee's business. The assessee being a trader in the business was aware of these courses of its business. It is not the case that the credit notes that were received in the relevant years were something abnormal for these years. In this background, we have to bear in mind the fact that the assessee had submitted the estimates fairly early in the beginning of the accounting years when it would have been difficult to predict the ultimate trading results. Furthermore, the Tribunal has held that, before the 15th March, the assessee knew or had reason to know the true position and in spite of that the assessee had not chosen to file any revised estimate. Taking all these factors into consideration, we are of the opinion, that there are materials to establish that the assessee had reason to believe that the estmates filed by it were untrue.
11. In the case of P. V. Kurian v. Income-tax Officer, Ernakulam, therewas an application under Article 226 of the Constitution of India against anorder of penalty. The order of penalty was based on two grounds, first,the explanation offerd by the assessee that the profits of the firm in questioncould not be ascertained before the end of March, 1956, was unacceptableand, secondly, that the assessee himself showed a much higher income thanwhat he had estimated. The court held that the sustain ability of thefirst ground was not open for review in an application under article 226 ofthe Constitution. But from the bare fact that there was disparity betweenthe estimate submitted by the assessee and the income returned by him, noinference can be drawn that the assessee had reason to believe the estimateto be untrue or that he knew the estimate to be untrue. The facts in theinstant reference are different. In the case of P. Arunachala Mudaliar v.Commissioner of Income-tax, what happened was, the assessee, a partner inseveral firms, was served with a demand notice for payment of advance taxof Rs. 7,947-8-0 under Section 18A(1) of the Act for the assessment year1952-53. The assessee acting under Section 18A(2) estimated his totalincome for the assessment year at Rs. 27,500 and calculated the tax payable for that year at Rs. 3,962-1-0. He submitted this estimate to the department in September, 1952, and paid three instalments of advance tax on that basis in September, 1952, December, 1952, and March, 1953. The estimate of the assessee was based on the trend of income from the business of the firms as disclosed by his business accounts. From November, 1952, there was a sudden spurt in the business of one of the firms and as a result his estimate of advance tax fell below 80 per cent. of the final assessment of the tax. The Income-tax Officer levied penalty on the assessee under Section 18A(9)(a) read with Section 28(1)(c) of the Act. It was submitted on behalf of the revenue in that case that the assessee should have submitted a revised estimate in March, 1953, after his income started shooting up. It was held that the assessee had made an honest and fair estimate upon which he paid the advance tax. It was further held that the assessee's failure to submit a revised return in March, 1953, was not a relevant consideration, as the mens rea of the assessee at the time when he made the estimate could not be adjudged by his subsequent conduct. The imposition of penalty was, therefore, unwarranted. It is to be observed in this case that there was a sudden change in the situation such as the withdrawal of the price control and other factors which brought in an unexpected amount of income to the assessee. In the instant case before us, nothing sudden or unexpected happened. Receipt of credit notes as mentioned hereinbefore was a normal incidence of the assessee's business. It is true that proviso to Section 18A(2) gives the assessee an option to file a revised return and penal action cannot be taken against an assessee for failure to exercise that option. But that is a factor which can be taken into consideration in the background of other factors in judging the state of mind of the assessee at the time when he filed the estimate originally. Subsequent conduct may not be sufficient evidence as to mens rea of an assessee at the time when he made the estimate but it is a relevant factor. Reliance was placed on behalf of the revenue on the case of Appavoo Pillai v. Commissioner of Income-tax,  57 I.T.R. 41 (Mad.), where it was held that an assessee who makes his estimate of advance tax under Section 18A(2) is expected to make an honest estimate and he can only do so on the basis of the accounts which were available with him on the date of the estimate. It was further held where an assessee submitted an estimate of income for purposes of advance tax under Section 18A(2) and the income fell far short of the sum assessed at regular assessment and the assessee was not able to show that his estimate was justified by tbe state of accounts as they stood on the date of the estimate, the order imposing the penalty could be lawfully passed. On the facts and in the circumstances of this case as mentioned hereinbefore in the background of the assessee's business we are of the opinion that the Tribunal was right in coming to the conclusion that the Income-tax Officer had materials before him to be satisfied that the estimates were submitted by the assessee in this case when the nssessee had reason to believe them to be untrue. In that view of the matter the answer to the question referred to this court must be in the affirmative and in favour of the revenue. The assessee will pay the costs of this reference.
Sankar Prasad Mitra, J.
12. I agree.