P ARUNACHALA MUDALIAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference application under the Indian Income-tax Act and the following question has been referred to us

(2.) THE assessee was served with a demand notice from the department for payment of advance tax of Rs. 7, 947-8-0 under section 18(A)(1) for the assessment year 1952-53. THE amount demanded was calculated on the basis of the assessment for the previous completed year 1951-52. THE date of the notice was 20th August, 1952. THE assessee estimated his total income for the assessment year 1953-54 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 on 13th September, 1952, and he paid three instalments of advance tax on the basis of the estimate in September, 1952, December, 1952, and March, 1953 For the year ended 12th April, 1953, relevant to the assessment year 1953-54, the assessee made a return declaring his total income at Rs. 37, 578. THE department computed the total income for that year at Rs. 53, 582 and levied a tax of Rs. 6, 794- 11-0. THE Income-tax Officer found that the tax estimated by the assessee under section 18A(2) fell below 80 per cent. of the final assessment of tax. A notice under section 28 of the Act was issued to the assessee asking him to show cause why a penalty should not be levied under section 18A(9)(a) read with section 28(1)(c) of the Act. THE assessee submitted the explanation that he was bona fide under the impression that his income assessable for the year 1953-54 would be very much less than the income assessed in respect of the financial year 1951-52, that though in the early part of the year 1952-53 the trend of income from all his businesses was downward, there was a sudden spurt of income on and from November, 1952, in the business of K. N. P. Arunachala Mudaliar and Co., due to removal of price control and other factors, and that there was every justification for his making the estimate in September, 1952, in the manner he did. In the statement of explanation the assessee set out the following tabular statement1952-53 I953-54 Rs. Rs Arunachala Knitting Factory 9, 806 2, 508 P. Perianna, Mudaliar Weaving Factory 3, 730 1, 299 P. Ramaswami, Woraiyur 13, 742 8, 661 K. N. P. Arunachala Mudaliar & Co. 15, 677 20, 597.

(3.) ON appeal the Appellate Assistant Commissioner of Tiruchirapalli confirmed this levy of penalty. He was of the opinion that it was the duty of the assessee to submit a revised return when he got better income as and from November, 1952, than previously and that this failure on his part to submit the revised estimate was sufficient to bring him within the penal provisions of section 18A(9)(a).