Commissioner of Income Tax Vs Birla Cotton Spinning and Weaving Mills Ltd.

Ajit Kumar Sengupta, J.@mdashThe assessee, Birla Cotton Spinning & Weaving Mills Ltd., has mills at Delhi and ginning and pressing factories in Malout (Punjab), Kesrisingapur (Rajasthan), Fatehabad and Sangaria (Haryana). The assessment years concerned are 1966-67 and 1968-69 for which the previous years ended on March 31, 1966, and March 31, 1968, respectively.

2. The Income Tax Officer served demand notice u/s 210 of the Income Tax Act, 1961, calling upon the assessee to pay Rs. 24,92,216 for the first year under reference and the assessee paid, as per its estimate, Rs. 2,50,897. For the second year under reference, the Income Tax Officer demanded Rs. 5,34,332 u/s 210 of the Income Tax Act, 1961, and the assessee paid, as per its estimate, Rs. 3,35,000. The facts revealed for the first year under reference are that the assessee filed an estimate showing an income of Rs. 11.15 lakhs on August 30, 1965. It filed another estimate on November 23, 1965, showing an estimated income of Rs. 7,00,000. It substituted these estimates by another estimate on March 9, 1966, declaring an estimated income of Rs. 6.8 lakhs which consisted of business income of Rs. 3.40 lakhs and dividend income of Rs. 3.40 lakhs. The assessee submitted a return declaring income from property at Rs. 26,754, business income of Rs. 9,80,431 and dividend income of Rs. 3,38,937. Income was assessed by the Income Tax Officer for the first year under reference only by enhancing the business income from Rs. 9,80,431 to Rs. 10,01,752. The Income Tax Officer started penalty proceedings against the assessee u/s 273 of the Act.

3. For the second year under reference, the assessee filed an estimate u/s 212 of the Act for Rs. 3,35,000 whereas income returned was Rs. 14,86,000. After giving effect to the appellate order, the income was finally assessed at Rs. 16,25,636. The Income Tax Officer started penalty proceedings against the assessee in terms of Section 273 of the Act. The income which was finally determined was more than the income returned by the assessee.

4. In the course of penalty proceedings, the assessee filed letters dated July 9, 1969, August 5, 1970, and February 23, 1972, and stated that estimate was filed on the basis of condition by attaching a statement giving the actual profits on the basis of which income returned for the first year under reference was filed. The Income Tax Officer rejected the contention of the assessee for both the years and levied penalty upon the assessee for both the years under reference.

5. When the assessee went in appeal to the Appellate Assistant Commissioner, he deleted the penalties levied upon the assessee for these two years. The Appellate Assistant Commissioner held that the assessee had basis for submitting the estimates and that they were done on the basis of the immediately preceding years and that the estimates were made on the trend of the business and that it was not proper to hold that the assessee knew or had reason to believe that the assessee''s estimates were untrue.

6. The Revenue came up in appeal before the Tribunal for these two years under reference. The Revenue contended that prima facie it appeared that the Appellate Assistant Commissioner made out a case but on a close reading of the order, it would be found that he accepted blindly what had been stated by the assessee and that there was no primary evidence on the basis of which he could come to the conclusion that the estimates were not untrue. Thus it was argued that the conclusion of the Appellate Assistant Commissioner was based upon irrelevant circumstances and that at the time when the appeals were filed, business accounts were before the Appellate Assistant Commissioner and he should have verified them to ascertain the correct position. The departmental representative argued that there was reason to disbelieve the assessee''s version that it based the estimate on the trend of income as disclosed by the accounts. It was also contended that the assessee had made only a random guess.

7. It was argued that what was the state of accounts at that time was not known and hence it was suggested that that position was to be looked into. It was also argued that the assessee belongs to a well-known group of industries having sophisticated administrative apparatus and also legal aid and as such it should show convincing evidence that the assessee had reason to believe that the estimate was not untrue. It was argued that it was unacceptable that the assessee could not judge the trend of business and that it did not have an idea as to what the business profit should be. It was argued that property income was not included in the estimate of income. The Revenue also relied on the decision of the Calcutta High Court in the case of United Asian Traders Ltd. Vs. Commissioner of Income Tax (Central), , and contended that the facts of that case are on all fours with the facts of the present case.

8. The learned counsel for the assessee, on the other hand, contended that the only discrepancy that would be found was in regard to ginning factory. The assessee had to deal with agricultural products and the variation of yield would depend upon various factors with reference to agricultural products and that no yardstick could be found in that regard and as such when the assessee had given a basis and when the Appellate Assistant Commissioner found the basis to be proper, his orders for the two years required no interference. It was stated that the assessee had always been paying advance tax regularly as demanded and that it had paid more advance tax than what has become payable. He stated that in the immediately preceding year, advance tax paid was Rs. 15.48 lakhs and tax demanded was Rs. 9.92 lakhs resulting in refund.

9. The Tribunal upheld the view taken by the Appellate Assistant Commissioner for these two years under reference. The Tribunal held that, on the facts and circumstances of the case, it is not possible to hold that the Income Tax Officer could take the view that furnishing of estimate of advance tax payable by the assessee was such that it knew or had reason to believe it to be untrue.

10. On the aforesaid facts, the Revenue filed an application u/s 256(1) of the Income Tax Act, 1961, suggesting four questions. However, the Tribunal referred the following common question for the aforesaid two assessment years :

" Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the orders of penalty for the assessment years 1966-67 and 1968-69 passed by the Income Tax Officer u/s 273 of the Income Tax Act, 1961 ? "

11. In this case, penalty was imposed u/s 273(a) of the Act. The learned counsel appearing for the Revenue has submitted that the facts and circumstances of this case fully justified the imposition of penalty u/s 273(a). The estimates filed by the assessee for the two years are untrue and the assessee had known or had reason to believe that the said estimates were untrue. There was no basis for filing the said estimates. The learned counsel for the Revenue has relied heavily on two decisions, one of the Madras High Court and the other of this court and has submitted that the facts of the said cases are almost similar to the facts of this case and the principles laid down therein should govern this case. The first decision relied on by the Revenue is in the case of Appavoo Pillai (Died) and Another Vs. Commissioner of Income Tax, Madras, . The other decision is in the case of United Asian Traders Ltd. Vs. Commissioner of Income Tax (Central), .

12. On the other hand, Mr. R.N. Bajoria, learned counsel appearing for the assessee, has submitted that the Appellate Assistant Commissioner and the Tribunal have taken into consideration all the relevant facts in coming to the conclusion that the conditions precedent for the imposition of penalty u/s 273(a) have not been satisfied. The Revenue did not establish that there was any deliberate furnishing of untrue estimates. He has relied also on several decisions in support of his contention that merely because there is disparity between the estimated income and the assessed income, no penalty could be imposed u/s 273(a). Before dealing with the merits of the respective contentions, it is necessary for us to briefly refer to the decisions which have been relied on by the learned counsel appearing for the parties.

13. One of the decisions heavily relied on by the Revenue is in the case of Appavoo Pillai (Died) and Another Vs. Commissioner of Income Tax, Madras, . Therein the assessee had several sources of income ; one of them is a bus business. In September, 1953, the Income Tax Officer issued a demand u/s 18A(1) of the Indian Income Tax Act, 1922, basing that demand on the last completed assessment, which was that of the assessment year 1948-49. Under Sub-section (2), the assessee has the liberty of estimating his income. and of paying advance tax in accordance with such estimate. In the estimate so submitted by him, he gave the estimated income as Rs. 25,000, but the total income as furnished by him came to Rs. 35,515. On assessment, however, his income was fixed at Rs. 90,759. The Income Tax Officer thereafter proceeded to apply Section 18A(9) of the 1922 Act. In the view, therefore, that the assessee''s estimate of income was untrue to his knowledge, the Income Tax Officer imposed the penalty in question. The assessee''s explanation was that the higher figure of the assessable income arrived at by the Income Tax Officer was mainly due to disallowances of depreciation to the extent of about Rs. 20,000 odd. It was also claimed that part of the addition made by the Income Tax Officer represented income which the Income Tax Officer inferred should have been made in the year of account in order to justify certain investments made by the assessee immediately after the close of the year of account. It was contended accordingly that since these additions were made rejecting certain objections put forward by the assessee, the enhancement over the returned income did not represent the real income which the assessee could possibly have estimated and included in his estimate u/s 18A(2). This explanation was not accepted, principally for the reason that the assessee did not produce any basis for the estimate which he had made. Accordingly, penalty was imposed. Even in the appeal before the Appellate Assistant Commissioner, no figures to justify the computation of the estimate made by the assessee were made available. The Appellate Assistant Commissioner upheld the imposition of penalty. In the further appeal to the Tribunal, the contentions again did not carry conviction to that appellate authority. The Tribunal was satisfied that the case fell within the scope of Section 18A(9) and dismissed the appeal. On those facts, the Madras High Court held that an assessee who makes an estimate of advance tax u/s 18A(2) is expected to make an honest estimate and he can do so only on the basis of the accounts which were available with him as on the date of the estimate. Where an assessee submitted an estimate of income for purposes of advance tax u/s 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 the state of accounts as they stood on the date of the estimate, the imposition of penalty u/s 18A(9) read with Section 28(1)(c) was lawful.

14. The next decision cited is in the case of United Asian Traders Ltd. Vs. Commissioner of Income Tax (Central), . There the assessee filed estimates of advance tax u/s 18A(2) of the Indian Income Tax Act, 1922, showing nil income and also showing the advance tax payable as nil for the accounting years 1958-59 and 1959-60. For one year, the income returned was Rs. 10,763 and for the other year Rs. 10,567. The assessment was completed for the year 1959-60 at Rs. 17,059 and for the second year 1960-61 on a total income of Rs. 12,974. The Income Tax Officer imposed penalty u/s 18A(9) of the old Act for the aforesaid assessment years. 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. On the dates on which the assessee had submitted the estimate u/s 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 estimate which it knew or had reason to believe to be untrue. The appeal to the Appellate Assistant Commissioner was rejected. Before the Tribunal, it was contended that the assessee was entitled to file its estimates of income at any time u/s 18A(2) of the Indian Income Tax Act, 1922, and there was no obligation on the assessee to wait till the end of the account year before filing its estimate under that sub-section. As, in this case, the assessee had made estimates of its business results in the months of June and July and, according to the state of accounts at that time, the assessee had reasonable grounds for estimating the trading results to be losses for each of these years, 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 and 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. 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, and it could not be said 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 March 15, of the subsequent year what amount of credit notes it was going to receive for the year ending on the 31st March. On these facts and in the circumstances of this case mentioned hereinbefore in the background of the assessee''s business, this court held 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 assessee had reasons to believe them to be untrue.

15. In the case of Commissioner of Income Tax Vs. S.B. Electric Mart P. Ltd., , this court held that if in a particular case the estimate is filed at the close of the accounting period, that does not by itself establish that the estimate which is filed is not only false but also false to the knowledge of the assessee. Before the expiry of the accounting year, an assessee 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 filing of the return. Therefore, unless there is evidence to indicate that 10 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 had filed it after the expiry of the accounting year, that he had such knowledge.

16. In the case of Ramnagar Cane and Sugar Co. Ltd. Vs. Commissioner of Income Tax, , the assessee-company carried on the business of manufacture and sale of sugar. Its previous year for the assessment year 1971-72 ended on August 31, 1970. It paid advance tax as demanded by the Income Tax Officer u/s 210 of the Income Tax Act, 1961, on an income of Rs. 5.44 lakhs. The last instalment of advance tax was paid on January 15, 1971. On May 7, 1971, the books of account of the assessee-company were audited and huge profits arose on the valuation of closing stock. The Income Tax Officer completed the assessment u/s 144 on a total income of Rs. 26.50 lakhs which was reduced to Rs. 24 lakhs by the Tribunal. The Income Tax Officer took the view that the assessee had failed to comply with the provisions of Section 212(3A) and imposed a penalty u/s 273 which was upheld by the Appellate Assistant Commissioner and the Tribunal. The court held that it could be reasonably said that the assessee had no idea as to the actual profits at the time when it had paid advance tax on the basis of profits earned in the immediately preceding year. Thus, there was no failure on the part of the assessee to file an estimate of such tax in terms of Section 212(3A). Moreover, the failure, if any, could not be said to have occurred without reasonable cause. Hence, the Tribunal was not justified in sustaining the order of penalty u/s 273.

17. In the case of Abhilash Kumari Oswal Vs. Commissioner of Income Tax, , although the total income amounted to Rs. 65,025, the assessee did not file any estimate u/s 212(3). The assessee contended that though she was admitted as a partner in the firm, yet her admission as a partner was subject to the approval of the Company Law Board, which was received on April 26, 1965, and she became an absolute partner after the approval of the Company Law Board and received it after the expiry of the relevant accounting year. Accordingly, the share income of the firm could not be included in her estimate u/s 212(3) of the Act. The Tribunal rejected the said plea and held that the assessee might have had some doubt in her mind but that doubt itself did not absolve the assessee from filing an estimate u/s 212(3) and that the imposition of penalty u/s 273(b) was valid. The High Court affirmed the view taken by the Tribunal.

18. u/s 273(a) of the Income Tax Act, 1961, corresponding to Section 18A(9) of the 1922 Act, penalty may be imposed for furnishing false estimate of advance tax payable by the assessee. Section 273(a) provides that the Income Tax Officer in the course of the regular assessment proceeding has to be satisfied that the assessee has furnished u/s 212 an estimate of the advance tax payable by him which he knew or had reason to believe to be untrue. u/s 210 of the Act, the Income Tax Officer may require the assessee to pay the advance tax determined in accordance with the provision of Sections 207, 208 and 209 of the Act. Since the advance tax is payable on the basis of the regular assessment or as the self-assessment made for the latest previous year, it may, therefore, bear no relation to the tax payable in respect of the income of the previous year relevant to the advance tax. Section 212 gives a right to the assessee to estimate his income of the relevant previous year and to pay the advance tax on the basis of his own estimate if his income is likely to be less than that on the basis on which the advance tax is determined. If an assessee wishes to displace the obligation imposed upon him by an order u/s 210, he has to file an estimate u/s 212. Such an estimate cannot be made with mathematical precision. The estimate in that sense can never be accurate. Whether, an assessee had knowingly filed a false estimate or he had reason to believe that the estimate is untrue has to be determined on the facts and circumstances appearing in each case. An assessee, if he is carrying on business, has to make a fair estimate of the profits expected to be earned during the relevant previous year. The estimate has to be based on objective facts. The assessee is required to take into account the normal trend of his business up to the time when he is required to file an estimate. The trend of the business by an assessee may be inaccurate or incorrect but this will not necessarily make the estimate with regard to the income an untrue one unless it can be shown that such estimate was made without any basis at all. It is for the assessee to produce materials on which he has framed his estimate. It is for the Revenue to show that the materials on which the estimate is based are no materials at all and no reasonable estimate could be based on such materials. It is only then the Revenue can hold that the assessee has filed false estimate or had reason to believe that the estimate is untrue. The burden of proving that an estimate of advance tax submitted by the assessee was false or inaccurate to his knowledge is on the Revenue. The question whether a penalty is imposable or not is essentially a question of fact. Several decisions which have been cited before us have laid emphasis on certain aspects which on the facts of those cases justified either the imposition or cancellation of the penalty. No positive rule can be laid down which will be applicable to cases of this nature. There must be evidence to show that the estimate filed by the assessee was false to the knowledge of the assessee or he has reason to believe it to be untrue. It will depend on the facts of a particular case whether there is evidence to prove the positive fact that the assessee has consciously filed an estimate which was false and false to his knowledge. Where the assessee offers an explanation and adduces evidence, the nature of the evidence may provide the material to come to the conclusion whether the assessee deliberately filed false estimate of advance tax. The mere disparity between the estimate submitted by the assessee and the income he himself returned or the Income Tax Officer finally determined in the assessment by itself will not justify the imposition of penalty u/s 273 of the Act. Where there is a disparity and the disparity is enormous, mere self-serving statement of the assessee that he thought that his estimate represented a probable income of the year would not be sufficient to escape the liability u/s 273 of the Act. He has to justify the basis of his estimate. The estimate must be an honest estimate based on the accounts which are available with the assessee on the date of estimate. The knowledge that the estimate is untrue or which the assessee believes to be untrue must be at the point of time when he submits the estimate. The mens rea or the mental element must be adjudged with reference to the facts and circumstances appearing at the time when the estimate was submitted. Mens rea of the assessee at the time when he made the estimate could not be adjudged by his subsequent conduct in returning a larger income :in the return than what was estimated for the purpose of payment of advance tax. The evidence, whether negative or positive, small or large, may show that an honest and fair estimate was made by the assessee and there was no conscious or deliberate furnishing of untrue estimate. In such a case, no penalty can be imposed.

19. It is in this background, we have to consider whether, on the facts of this case, the Tribunal was right in holding that no penalty can be imposed for deliberately furnishing an untrue estimate. Particulars of tax demanded, tax estimated, shortfall in payment, quantum of penalties, etc., are tabulated hereunder :

20. For the assessment year 1966-67, the Income Tax Officer levied penalty mainly on two grounds :

(i) that the assessee did not include the property income of Rs. 26,254 for making the estimate for advance tax, and

(ii) that the trend in increase in the profit of ginning and pressing factories was not taken into account at the time of making the estimate. The Appellate Assistant Commissioner held that the difference in the estimated income and the returned income was due to the profits from ginning and pressing factories. The difference between the income earned and returned was Rs. 6.66 lakhs (Rs. 13.46--6.80) The Appellate Assistant Commissioner in holding that the difference was on ginning and pressing factories had taken into consideration the following statement:

21. Less depreciation & development rebate 34.70.

22. From the aforesaid figures, the Appellate Assistant Commissioner held that there was practically no difference against the Mills'' accounts (Items i & ii) and substantial difference was on ginning & pressing factories'' accounts (Item iii). The ginning & pressing factories of the assessee were situated at four places--one at Punjab, another at Rajasthan and the other two at Haryana. The estimate was filed on March 4, 1966, when the cotton season was in full swing. By that time, complete data of yield was not received from those four factories. The correct particulars of yield are generally available 5/6 months after the close of the season, i.e., August or September. The assessee for the purpose of its estimate adopted the yield of the earlier year. Subsequently, it was found that the actual yield during the season of 1965-66 was much more than the 1964-65 season. The Appellate Assistant Commissioner compared the percentage of yield in different units with regard to kapas ginned and pressed for the season 3964-65 (assessment year 1965-66) with the season 1965-66 (corresponding to the assessment year 1966-67). He found that yield with regard to quality No. 320F taken was higher, being 34.65% in Malout unit, 35.34% in Kesrisingapur unit, 34.90% in Fatehabad unit and 34.04% in Sabgaria unit, whereas in the immediately preceding year with regard to the first year under reference, the yield in these units was 33.84%, 33.06 and 32.82%, respectively. He also noticed that the percentage of desi cotton was higher during this year. He also found that the assessee had extra yield of 2,951 quintals of No. 320F cotton and 555 quintals of desi cotton. He thus held that the assessee had reasonable explanation to offer with regard to the estimate of advance tax filed by it. On those facts, the Appellate Assistant Commissioner held that the assessee had a basis while submitting its own estimate. He also found that it was the basis of the immediately preceding year and that the estimate was also based on the trend of the business when the assessee furnished its estimate.

23. For the assessment year 1968-69, the difference between the income estimated and assessed was Rs. 8.85 lakhs (Rs. 16.25--7.40). The Income Tax Officer imposed penalty rejecting the contention of the assessee mainly on the ground that it was possible on the part of the assessee to make an estimate of the increased profit from ginning and processing factories. The Appellate Assistant Commissioner found that the increased profit was due to substantial increase in profit in ginning and pressing factories. He gave the following chart to come to the conclusion that the assessee filed the estimate on the basis of conditions prevailing at that time :

24. In the next two months, February and March, the position was altogether different as may be seen from the following particulars:

25. The Appellate Assistant Commissioner held that while for the season relevant to the assessment year 1968-69, February and March purchases of kapas amounted to Rs. 191.04 lakhs, in the immediately preceding two years they were for Rs. 15.04 lakhs and Rs. 22.90 lakhs only, secondly, the large purchases had pushed up yield of cotton abnormally. According to the Appellate Assistant Commissioner, the assessee filed its estimate on the basis of the conditions then obtained and on reasonably anticipated expectation. The ultimate results from the large purchases of kapas and the excess yield of cotton easily covered the difference of Rs. 8.75 lakhs in income in this assessment. According to the Appellate Assistant Commissioner, the assessee could not anticipate this sizable income while filing its own estimate in the middle of March, 1968.

26. Before the Tribunal, the Revenue did not dispute the facts and circumstances as brought on record by the Appellate Assistant Commissioner.

27. The Tribunal found that the difference in the estimated income and the income returned arose due to the profits from ginning and pressing factories which were situated at four places, one at Punjab, another at Rajasthan and two others at Haryana. The estimate of advance tax was prepared on the basis of the estimated profits of the various units. It was stated by the assessee before the Income Tax Officer that the exact yield could be determined only in May/June, 1966, i.e., after the close of the accounting year. The Revenue did not verify the position as to whether before May/June, it was not possible to know the exact position. There is no evidence that in the factories at Rajasthan, Haryana and Punjab, there is a teleprinter system or telex communication so that the assessee could get information then and there. The Tribunal held that unless verification Was made, the Income Tax Officer was not justified in holding that an increasing trend in yield was noticeable before furnishing the estimate. The assessee submitted the estimate based on materials of the previous years. The Tribunal also found that there was no mala fide intention in submitting the estimate of income in the manner it was done by the assessee. It could be found that in the earlier year the assessee paid advance of Rs. 15.48 lakhs whereas tax assessed was Rs. 9.92 lakhs, resulting in a refund. The assessee filed three estimates during the first year under appeal first at Rs. 11.15 lakhs, second at Rs. 7 lakhs and third at Rs. 6.8 lakhs. When the assessee filed the estimate against the demand of Rs. 24,92,216 for the first year, it noticed that there was a definite declining of profit and as such it first submitted the estimate at Rs. 11 lakhs and thereafter reduced it to Rs. 6.8 lakhs. Looking into the history from the assessment year 1964-65, it was found that the assessee paid advance tax of Rs. 22.70 lakhs whereas income assessed was Rs. 23.52 lakhs. Thus it cannot be stated that the assessee was motivated not to pay the advance tax as demanded by the Income Tax Officer u/s 210 of the Act. The Tribunal also took note of the fact that the Income Tax Officer did not dispute that the statement as furnished and the explanation that was given were an afterthought. The findings of the Income Tax Officer that increase in yield of cotton was noticed by the assessee from day to day before filing of the estimates and that increased profits arose at the time of furnishing the estimate on March 9, 1966, and that there was no reason for anticipating fall in profit were not warranted by materials on record. Actually, as against the demand of Rs. 24,92,216 for the first year, there was income that was determined at Rs. 13,45,462 for the first year. Thus there was reason for anticipating fall in income as compared to the demand raised by the Revenue. There were no laches on the part of the assessee with regard to the assessment year 1967-68 and there were no penalty proceedings started against the assessee for that year. It is for the assessment year 1968-69 that the Income Tax Officer started penalty proceedings in terms of Section 273(a) of the Act. This, according to the Tribunal, would also go to indicate that the assessee, had no mala fide intention of submitting untrue estimate. The Appellate Assistant Commissioner, in his order, stated that complete data of yield was not received from four units. The Income Tax Officer did not challenge the finding of the Appellate Assistant Commissioner that correct particulars of yield were available after 5/6 months from the close of the accounting year. It was held that there is no evidence that at the material time the assessee had the information that profit of the assessee would go up to such an extent as would warrant it to pay tax of Rs. 24,92,216. The assessee stated that results of yield could be taken from agricultural products and various other factors that would determine the position about the yield. It is not the case of the Revenue that in cases of ginning and pressing factories, a normal incident was increase in profits or increase in yield. The Appellate Assistant Commissioner stated that the assessee did not know nor had he reason to know the true position.

28. One other point was raised by the Income Tax Officer in his order that the property income was not taken into consideration in filing the estimate and as such the assessee consciously failed to file a true estimate. The Tribunal held that the property income was never shown separately while filing the estimate of advance tax and that property was part of the assets of the assessee and, in such circumstances, it cannot be stated that the assessee omitted income from property with the oblique purpose to avoid payment of advance tax. Records do not indicate that for not showing property income separately, the assessee was penalised with respect to estimate of advance tax filed by it in the earlier years or in the subsequent years.

29. It appears to us that the Tribunal in confirming the order of the Appellate Assistant Commissioner took into consideration all the relevant facts. The real question is whether the assessee knew or had reason to believe that the estimates submitted by it were untrue at the time when the assessee made them. Since this related to the state of account at the point of time when the assessee submitted the estimates and it had business accounts before it when it made the estimates, if it could be shown that it based the estimates only on the trend of income as disclosed by the business accounts, notwithstanding the variation between its estimate and the final assessed figure, it could not be said that it had any reason to believe its estimates to be untrue. There is no evidence that at the material time the assessee had the information that the profit of the assessee would go up to such an extent as would warrant it to pay the tax as demanded u/s 210 of the Act. The assessee adopted a particular basis for submitting the estimates which has not been challenged to be dishonest or mala fide. The trend in increase in the profit of ginning and pressing factories was not available with the assessee when the estimates were filed. Therefore, the assessee filed the estimates on the basis of the materials of the previous years and materials available at the time when such estimates were filed. The conduct of the assessee, which is a relevant factor, should also be taken into consideration. For three years, the assessee paid an advance tax of Rs. 22.70 lakhs whereas the income for these years aggregated to Rs. 23.52 lakhs only. Thus no motive can be imputed to the assessee for not paying the advance tax as demanded u/s 210. The Revenue failed to establish that the assessee has consciously filed an estimate which was false and false to its knowledge. There was no circumstance which would justify the inference that the assessee knew its estimate to be untrue.

30. The concurrent finding of fact by the Appellate Assistant Commissioner and the Tribunal is that there was a reasonable basis for submitting the estimate. If that be the position, the estimates could not be characterised as estimates which the assessee knew to be untrue. Having regard to the facts and circumstances as appearing from the records, we are of the view that the Tribunal rightly held that it could not be said that the assessee furnished an estimate which it knew or had reason to believe it to be untrue. Neither the approach nor the finding of the Tribunal can be said to be erroneous.

31. In the result, the question in this reference is answered in the affirmative and in favour of the assessee.

32. There will be no order as to costs.

33. Leave is given to file the correct copy of the order of the Appellate Assistant Commissioner dated May 16, 1975.