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Commissioner of Income-tax Vs. S.B. Electric Mart P. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 425 of 1973
Judge
Reported in(1981)20CTR(Cal)267,[1981]128ITR276(Cal)
ActsIncome Tax Act, 1961 - Section 273
AppellantCommissioner of Income-tax
RespondentS.B. Electric Mart P. Ltd.
Appellant AdvocateB.K. Naha, Adv.
Respondent AdvocateNone
Excerpt:
- .....instead of paying advance tax of rs. 21,838 as demanded by a notice dated june 13, 1960, filed an advance tax estimate on january 11, 1961, showing the estimated total income at rs. 5,500 and the advance tax payable thereon at rs. 2,475. subsequently, however, the return of income was filed showing a total income of rs. 9,287 and the assessment was made on a total income of rs. 55,658 (as revised in appeals). the ito was, therefore, of the opinion that since the advance tax estimate was filed on january 11, 1961, i.e., after the end of the assessee's previous year on december 31, 1960, and the estimated total income in the advance tax estimate was shown at rs. 5,500 only, as against rs. 9,287 according to the assessee's own return of income subsequently filed as against rs......
Judgment:

Sabyasachi Mukharji, J.

1. The assessment year involved is 1961-62. The assessee is a private limited company and the reference relates to the assessment year 1961-62. For this assessment year, the assessee-company instead of paying advance tax of Rs. 21,838 as demanded by a notice dated June 13, 1960, filed an advance tax estimate on January 11, 1961, showing the estimated total income at Rs. 5,500 and the advance tax payable thereon at Rs. 2,475. Subsequently, however, the return of income was filed showing a total income of Rs. 9,287 and the assessment was made on a total income of Rs. 55,658 (as revised in appeals). The ITO was, therefore, of the opinion that since the advance tax estimate was filed on January 11, 1961, i.e., after the end of the assessee's previous year on December 31, 1960, and the estimated total income in the advance tax estimate was shown at Rs. 5,500 only, as against Rs. 9,287 according to the assessee's own return of income subsequently filed as against Rs. 55,658, which was ultimately assessed, the advance tax estimated by the assessee was what it knew or had reason to believe to be untrue. He, therefore, imposed a penalty under Section 273(a) of Rs. 7,735.

2. Being aggrieved with this imposition of penalty the assessee-company went up in appeal to the AAC, who held that the advance tax estimate was on the same income as the amount shown in the return of income, and the difference between the returned income and the assessed income was not due to any deliberate or conscious suppression of income. He, therefore, cancelled the penalty imposed under Section 273(a).

3. The matter thereafter went before the Tribunal. The Tribunal noted the facts, stated hereinbefore, and noted the contentions of the advocates for the contesting parties. The Tribunal was of the view that before Section 273(a) could be attracted, it must be shown that the assessee had furnished under Section 212 of the I.T. Act, 1961, an estimate of advance tax payable by him which he had reason to believe to be untre. Therefore, in order to attract the penal provision of Section 273(a), there must be evidence to show that the estimate of advance tax had been filed by the assessee and that the assessee had reason to believe it to be untrue. The facts of this case have been stated hereinbefore. It is true in this case that the estimate was filed by the assessee at the close of the accounting year. The accounting year closed on the 31st December, 1960. But the estimate was filed by the assessee on 11th January, 1961. The assessee admitted that the assessee filed the return after the expiry of the assessment (accounting year ?)--by the end of June, 1961. There is undoubtedly a difference between the two estimates filed by the assessee after the close of the accounting year and the ultimate return filed by the assessee in respect of the said assessment year amounting to Rs. 5,000 approximately. But this difference was not very substantial in magnitude. But, even then on behalf of the revenue it was contended, on the authority of the decision in the case of Hind Products P. Ltd. v. CIT : [1980]121ITR903(Bom) and in the case of CIT v. Kundanlal , that the assessee must file an estimate which he bona fide believed to be true and correct. It may be so. That proposition we cannot dispute. Before the penal provision of Section 273(a) can beattracted, there must be evidence that the estimate filed by the assessee was false to the knowledge of the assessee or he had reason to believe it to be untrue. Now, the Tribunal has found that there was no such evidence. The fact that in a particular case the estimate was filed at the close of the accounting period did not by itself establish that the estimate which was filed was not only false but also false to the knowledge of the assessee. Now, the question is that before the expiry of the accounting year, one may or may not have a full picture of the result of the income earned in that year. The time for making that calculation comes at the time of the filing of the return. Therefore, unless there was evidence to indicate that 10 days or 12 days prior to or after the close of the accounting period the assessee knew or had reason to believe that the estimate filed by him was false it cannot be presumed, simply because he has filed it after the expiry of the accounting year, that he had such knowledge,

4. There is another aspect of the matter. In this case the Tribunal has come to a conclusion categorically that it had not been established that the assessee knew or that the assessee had reason to believe that it (the estimate) was false and there was no material before the Tribunal to that effect. Now, this finding was specifically challenged by raising a question that this finding was perverse or unreasonable before the Tribunal under Section 256(1) of the I.T. Act, 1961. But the Tribunal did not refer this question but has referred the following question;

'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in confirming the order of the Appellate Assistant Commissioner of Income-tax cancelling the penalty imposed by the Income-tax Officer under Section 273(a) of the Income-tax Act, 1961?'

5. We have very grave doubts whether on the ambit of this question, as referred to hereinbefore, and in the background of the fact that when the Tribunal had refused the question under Section 256(1) on the finding of fact and in view of the fact that there was no subsequent application under Section 256(2) of the Act, it is open to the High Court to go into this question that this finding was perverse or unreasonable, a proposition which was argued by learned advocate for the revenue and, in aid of which, reliance was placed on the observations of the Supreme Court in the case of CIT v. S.P. Jain : [1973]87ITR370(SC) . We are of the opinion that the Tribunal did not come to a wrong finding on the consideration of the facts and the law. The observations, on which reliance has been placed on behalf of the revenue in the last, mentioned case, were made in a different context. There, actually, the High Court refrained the question, and, taking the overall picture, the Supreme Court was of the view that in the ambit of the question referred to on the fact that certain findings were perverse andit could be gone into. But the facts of the instant case are quite different. But apart from the fact, as we have mentioned before, even if we allow learned advocate for the revenue to urge that the Tribunal came to that conclusion wrongly by misunderstanding the actual provision of law, even then we are of the opinion that there is no scope for the argument that the Tribunal misunderstood the requirements of law because Clause (a) of Section 273 of the Act specifically requires that two things are to be found as a fact: that at the time of making and filing the estimate of advance tax, the estimate was false and the assessee had the knowledge or had reason to believe that the estimate was false. But there is no such evidence in this regard before the Tribunal and the Tribunal has recorded that in its findings.

6. In the premises, in our opinion, the Tribunal was correct in its conclusion and the question must be answered in the affirmative and in favour of the assessee.

7. There will be no order as to costs.

Sudhindra Mohan Guha, J.

8. I agree.


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