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TMI Blog1973 (10) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... onductors, etc. The assessee's accounting year ends on 31st December. For the period relevant to the assessment year 1957-58, a notice was served on the assessee on May 31, 1956, indicating that the assessee was liable to pay income-tax in the sum of Rs. 48,639.20 under section 18A(1). The assessee filed an estimate on June 12, 1956, showing a loss in the sum of Rs. 50,000 till that date. On September 13 or 14, 1956, the assessee voluntarily revised its estimates showing an estimated income in the sum of Rs. 50,000. The department issued another notice to the assessee on December 1, 1956, making a revised demand upon the assessee to pay an advance tax in the sum of Rs. 1,03,458.75 on an estimated income of Rs. 3,03,565 based on the total income assessed for the accounting period relevant to the assessment year 1956-57. The assessee repeated its estimated income by its revised statement dated December 14, 1956, to be at Rs. 50,000. This estimate was filed by the assessee, it is claimed, on the basis of the books of account and material then available to the assessee. The assessee revised certain bills already submitted by it to the Government departments which resulted in increasing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration the failure on the part of the assessee to file the revised estimate on March 15, 1957, and this being an extraneous consideration has vitiated his conclusion. He placed reliance on United Asian Traders Ltd. v. Commissioner of Income-tax , P. V. Kurian v. Income-tax Officer, Ernakulam and P. Arunachala Mudaliar v. Commissioner of Income-tax . His further submission was that falsity of the explanation of the assessee was not enough to reach a conclusion of mens rea and he placed reliance on Commissioner of Income-tax v. Anwar Ali. This, he urged, was a relevant consideration because the provisions of section 28 are of a penal nature. Mr. S. K. Mal Lodha, learned counsel for the revenue, urged that the estimate is for the year and not for any quarter, and if a person failed to file a revised estimate under section 18A(2) then he was guilty of furnishing particulars which were untrue to his knowledge or at least which he had reason to believe to be untrue as proved in the circumstances of the case. He further urged that the assessee was in duty bound to file a revised estimate on the 15th March, 1957, in view of the provisions of section 18A(2) and the proviso thereto. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed under sub-section (2) the estimates of the tax payable by him which he knew or had reason to believe to be untrue he shall be deemed to have deliberately furnished inaccurate particulars of his income within the meaning of section 28(1)(c) of the Act. The Tribunal has found that the Income-tax Officer made a revised demand requiring the appellant to pay by way of tax the sum of Rs. 1,03,458.75. The appellant filed a revised estimate on September 13, 1956, showing an income of Rs. 50,000 and paid tax in the sum of Rs. 23,000. The estimate of the income was repeated on December 14, 1956. Thereafter no revised estimate was submitted by the assessee. The assessment was completed on August 31, 1960, and the total income was determined at Rs. 2,09,968 as against the income of Rs. 84,220 shown by the assessee. The explanation offered by the assessee was that certain bills were revised in the month of December, 1956, and as a result of this he had received a profit of Rs. 40,218 and, therefore, it had not made an incorrect estimate on September 13, 1956. The Tribunal observed that " it may be correct up to some extent but the appellant knew the correct position on 31st December, 1956, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of his total income; and the provisions of section 28, so far as may be, shall apply accordingly ..........." Section 28(1)(c) reads : " 28. Penalty for concealment of income or improper distribution of Profits.-(1) If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person .- ...... (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it may direct that such person shall pay by way of penalty, in the case referred to in clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and a half times that amount, and in the cases referred to in clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income ........" While examining the provisions of section 28(1)(c) of the Act the hon'ble judges of the Supreme Court in Anwar Ali's case have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the law that if an estimate of income is submitted honestly and if it turns out to be incorrect due to some unexpected income later, the estimate originally honest becomes dishonest and the assessee should be penalised. The grammatical construction of section 18A(9) clearly supports this interpretation. The important condition to which their Lordships of the Supreme Court referred in the judgment quoted above is the consciousness on the part of the assessee at the time of the furnishing of the estimate which is material for attracting the penal provisions. Consciousness is a state of mind which must be correlated to the state of affairs at a given point of time, viz., when the estimate of income is submitted. In our opinion the legislature did not intend to levy penalty on those who lacked the capacity of correct anticipation. The truth or otherwise of an estimate at a given point of time is the gravamen of the charge in a proceeding under section 28(1)(c). And, therefore, in our view the learned Members of the Tribunal were in error when they observed that the estimate given on the 13th September, 1956, and repeated on the 14th December, 1956, " ceased to be an honest " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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