POPULAR LUNGI CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question has been referred to this court for its opinion by the Income-tax Appellate Tribunal at the instance of the assessee :

(2.) THE assessee is a registered firm and for the assessment year 1970-71, the Income-tax Officer raised an advance tax demand under section 210 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), in a sum of Rs. 49,722 in August, 1969, based on the then latest completed assessment for the year 1964-65 which showed a total income of Rs. 2,13,750. THE assessee, without complying with the said demand, sent an estimate under section 212(1) on September 6, 1969, estimating its total income at Rs. 1,16,000 and the tax thereon at Rs. 14,916. THEreafter, the assessee filed a return of income for the year 1970-71 showing an income of Rs. 2,67,935. However, the assessment was completed on a total income of Rs. 5,87,200 resulting in a tax demand of Rs. 1,39,577. THE Income-tax Officer thereafter initiated penalty proceedings for the assessee's failure to file an estimate in accordance with section 212(3A) of the Act and ultimately levied a penalty of Rs. 8,977.

(3.) THE learned counsel for the assessee, however, refers to the decision of the Bombay High Court in Hind Products (P.) Ltd. v. CIT [1980] 121 ITR 903, in support of his plea that once having given an estimate under section 212(1), the assessee is not under an obligation to submit an estimate under section 212(3A). But we do not see how that decision will apply to the facts of this case. THEre, the assessee filed an estimate of losses. However, profits accrued subsequently when the Income-tax Officer held that the estimate filed by the assessee was mala fide and unreal and, therefore, penalty was called for. When the matter reached the Bombay High Court, it was held that the estimated income may or may not be the same as the ultimate returned income shown by the assessee, that the word "estimate" implies the concept of approximation and it can never be accurate, that therefore, merely because at the end of the year, an assessee is shown to have earned an income which is more than that shown in the estimate filed under section 18A(2) of the 1922 Act, which fact alone will not by itself indicate that the estimate was known to be untrue or that the assessee had filed an estimate having reason to believe that it was untrue. That situation does not arise here. Here we are concerned with the question as to whether the assessee who has filed an estimate under section 212(1) ceases to be under an obligation to file a return under section 212(3A). That question did not come up for consideration in the said decision.