9911796707
TMI Blog1969 (6) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... 's total income at Rs. 17,059. For the assessment year 1960-61 a notice of demand for advance tax for a sum of Rs. 7,568 was served on the assessee on the 27th May, 1959. On the 8th July, 1959, the assessee filed an estimate under section 18A(2) of the said Act showing its income during the accounting year 1959-60 as nil and the advance-tax payable as nil. The income-tax return for this year was filed on the 19th May, 1961, disclosing a total income of Rs. 10,567. The assessment for this year was completed on a total income of Rs. 12,974. The Income-tax Officer, thereafter, issued notices on the assessee under section 18A(9)/28(1)(c) of the Indian Income-tax Act, 1922, and, after giving the assessee an opportunity, imposed penalties of Rs. 2,100 and Rs. 1,400, respectively, for the years 1959-60 and 1960-61. In the order of the Income-tax Officer for the year 1959-60 he had stated : " I have seen the ledger of the assessee and I find that he was throughout the year in the knowledge of the fact that he would receive at least Rs. 5,420 by 31st March, 1959, on account of refunds representing price of excess goods supplied to foreign buyers. " Similar observations appear in the order m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to wait till the end of the accounting year before filing its estimate under that sub-section. The proviso only gave the assessee an option to file a revised return at any time before the 15th of March of the next year. As, in this case, the assessee 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, it was contended that 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. In the first year it appears that the assessee received credit notes to the extent of Rs. 13,410 and debit notes of Rs. 3,647 after 31st of March, 1959, resulting in a profit of about Rs. 10,000. It was urged that this explained the assessee's returned income of Rs. 10,763. It was further urged that if the balance of these credit and debit notes received after the end of the year was not brought into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoking the provisions of the section. The burden lies upon the revenue to prove that the conditions laid down therein were satisfied before an order could be made. The learned counsel relied on the decision in the case of Commissioner of Income-tax v. Gangadhar Banerjee Co. (Private) Ltd., and the decision of this court in the case of Commissioner of Income-tax v. Anwar Ali. Mr. Banerjee then submitted that, in view of the fact that these credit and debit notes were received after the 31st of March, it was not possible to include in the estimates that were originally filed the amount received by his client by these credit notes. According to him, without these credit notes the estimates made by his client were proper and correct. He further submitted that the assessee had no obligation to file a revised return and failure to file a revised estimate would not establish that at the time when the original estimates were filed either the assessee knew that the estimates were false or that he had reason to believe that the estimates were not true. Reliance was placed by the learned counsel on the decision in the case of P. V. Kurian v. Income-tax Officer, Ernakulam and the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are received by the assessee in respect of the shipment. " Again, it has been observed : " It was contended that, in this case, having accepted that the assessee's business was subject to heavy fluctuation in prices, the Income-tax Officer was not justified in holding that the assessee submitted an estimate which it knew or had reason to believe to be untrue. " Therefore, the assessee's business was of such a nature according to the assessee that it was difficult to predict the ultimate trading result. It also appears that the receipt of credit notes after the end of the year was also a normal incident of the assessee's business. The assessee being a trader in the business was aware of these courses of its business. It is not the case that the credit notes that were received in the relevant years were some thing abnormal for these years. In this background, we have to bear in mind the fact that the assessee had submitted the estimates fairly early in the beginning of the accounting years when it would have been difficult to predict the ultimate trading results. Furthermore, the Tribunal has held that, before the 15th March, the assessee knew or had reason to know the true po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shooting up. It was held that the assessee had made an honest and fair estimate upon which he paid the advance tax. It was further held that the assessee's failure to submit a revised return in March, 1953, was not a relevant consideration, as the mens rea of the assessee at the time when he made the estimate could not be adjudged by his subsequent conduct. The imposition of penalty was, therefore, unwarranted. It is to be observed in this case that there was a sudden change in the situation such as the withdrawal of the price control and other factors which brought in an unexpected amount of income to the assessee. In the instant case before us, nothing sudden or unexpected happened. Receipt of credit notes as mentioned hereinbefore was a normal incidence of the assessee's business. It is true that proviso to section 18A(2) gives the assessee an option to file a revised return and penal action cannot be taken against an assessee for failure to exercise that option. But that is a factor which can be taken into consideration in the background of other factors in judging the state of mind of the assessee at the time when he filed the estimate originally. Subsequent conduct may not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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