9911796707
TMI Blog1991 (3) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 312.46 lakhs on which tax payable worked out to Rs. 180.45 lakhs. The assessee paid two instalments of advance tax on the basis of this estimate on11th June, 1976and on14th Sept., 1976at Rs. 59.31 lakhs each. On20th Oct., 1976the Assessing Officer issued revised advance tax notice under s. 210 demanding total tax during the financial year at Rs. 454.46 lakhs worked out on an income of Rs. 1006.40 lakhs. On12th Dec., 1976, the assessee filed another estimate of income on an income of Rs. 550.00 lakhs on which advance tax payable was worked out at Rs. 317.62 lakhs. On13th Dec., 1976, the assessee paid advance tax of Rs. 175.75 lakhs besides tax deducted at source was Rs. 15.12 lakhs and 8.13 lakhs. On30th June, 1977the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his shows that the appellant did not make a statutory compliance on proper basis. (ii) In respect of Rayon, FEM, SPRC Reg. Office, the claim of losses amounting to Rs. 200 lakhs was without any basis. (iii) In regard to the Nylon/SSF/Tyrecord and Cement units, the gross profit for the first four months was worked out at 504 lacs. For working out the gross profit of the next 8 months, the appellant estimated a fall in the gross profit of 30 per cent on the basis that such a fall was there in the profit of May, 1976 as compared to that of April, 1976. The profit for the month of May, 1976 was Rs. 112 lacs whereas the profit for April, 1976 was Rs. 159 lacs. The appellant, however, applied 30 per cent out to the profit for the month of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding whether there was underestimate of advance tax in the first estimate filed by the appellant. The ITO has relied upon the Punjab Haryana High Court decision in the case of CIT vs. Punjab Business Supply Co. Pvt. Ltd. (1986) 55 CTR (P H) 78 : (1986) 159 ITR 664 (P H)." The assessee filed the explanation with regard to the conclusion arrived at by the Assessing Officer and the CIT(A) was satisfied with such explanation except one relating to application of 30 per cent cut to the profits of May, 1976. While explaining the basis for estimating the income the assessee had explained that it was maintaining a monthly gross profit register which was actually giving monthly net profit before depreciation. As per the gross profit register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer is bound to consider the material on record and the material placed before him by the assessee, in order to arrive at the conclusion as to whether the estimate filed by the assessee is an underestimate. According to the learned counsel, the estimate implies approximation and calculation based on probabilities. Dr. Narayanan pointed out that the assessee-company had based its estimate on proper basis and the CIT(A) has confirmed the levy merely finding fault with the manner of calculation. According to him, the bona fide of the appellant cannot be questioned in the background of the report of Manager Accounts of downward trend of sales at 40 per cent and actual overall market trend. According to him, the default not having established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not a bona fide estimate and, accordingly, the levy of interest under s. 216 was justified. 7. In reply, the learned counsel for the assessee contended that there is no finding by the Assessing Officer that the estimate filed by the assessee was not bona fide estimate. The learned counsel relied upon the decision of the Gujarat High Court in the case of CIT vs. Nagri Mills Ltd. (1986) 57 CTR (Guj) 304 : (1987) 166 ITR 292 (Guj) and the decision of the Delhi High Court in the case of CIT vs. Jay Engineering Works Ltd. in ITC No. 157 of 1980 for the proposition that interest under s. 216 can be imposed only when it is established that the underestimate was deliberate. 8. We have given our careful consideration to the rival contentions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act. The Dictionary meaning of the word "estimate" is an approximate calculation based on probabilities. For making an underestimate an application of mind is required on the part of the maker. The question whether there was justification for the estimate or whether it was an underestimate has got to be examined with reference to the material available at the time when the estimate was filed. As against the income of Rs. 610.54 lakhs on the basis of which notice under s. 210 was issued to the assessee, the assessee estimated the income at Rs. 312.46 lakhs. The basis for lower estimate has been accepted by the CIT(A) but for an amount of Rs. 33 lakhs which is worked out on the basis of actual profits for the month of May, 1976 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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