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TMI Blog1986 (3) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... x purpose was much lower than the income returned and the income assessed. Accordingly, he initiated proceedings and issued notice under section 273. He gave the assessee an opportunity of being heard. The assessee filed an explanation dated 22-3-1984 which was considered by the ITO. He mentioned that the assessee submitted that a search was conducted by the department on 27-10-1976 and the books of account up to 27-10-1976 were seized and were released only on 19-6-1980. It was also submitted that the assessee filed a settlement petition before the Settlement Commissioner on 24-6-1977 and the staff of the assessee were busy in preparing the settlement case and there was also labour unrest. It was, therefore, contended that the estimate filed was an honest attempt and the same should be taken as correct and fair. 3. The ITO pointed out that the previous year of the assessee for the assessment year 1978-79 ended on 31-10-1977 and the books of account for the relevant period were not seized by the department at the time of search which was conducted earlier, i.e., on 27-10-1976. He pointed out that the estimate was filed on 15-12-1977, i.e., one and a half months after the closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO has not brought on record any such material at all and he has imposed the penalty merely on the difference between the income estimated and the income returned. That apart, he mentioned that the unsettled condition that followed in the wake of the raid was one of the material circumstances which must be taken into account and that while deciding whether this was a fit case for levy of penalty, it was well settled that if certain default has occurred owing to circumstances beyond the control of the assessee, no penalty was eligible. He, therefore, cancelled the penalty. Hence, this appeal by the revenue. 5. It is urged by the learned departmental representative that the Commissioner (Appeals) erred on facts and in law in cancelling the penalty in spite of the facts which have been brought out by the order of the ITO and on the basis of the materials on record. The points noted by the ITO are stressed by the learned departmental representative in saying that the accounting year of the assessee for the present purpose ended on 31-10-1977, whereas an estimate was filed on 15-12-1977, i.e., one and a half months after the close of the accounts and, therefore, it cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward from earlier years and in such a situation, the assessee was unable to form an idea of the current year's income, for the purpose of advance tax. The submissions made before the authorities below are repeated before us also to the effect that the staff of the assessee were busy with the settlement matter which followed the raid conducted by the department. In this connection, the assessee's learned counsel submits that in a similar situation in the case of directors of the assessee-company, imposition of penalty under section 140A (3) of the Act was held to be not sustainable by the Tribunal, in its order in WT Appeal Nos. 605, 610 and 612 (Cal.) of 1984 dated 18-12-1985. It is argued that the effect of the raid and the subsequent filing of the settlement petition had actually kept the assessee and the staff busy and under such similar circumstances, the present assessee also having suffered the same disadvantage should not have been penalises by the ITO under section 273 as mentioned earlier. Copy of the Tribunal's order relied upon is placed in our file along with the assessee's letter dated 22-3-1984 filed before the ITO at the time of the show-cause notice. 7. It is als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to have arisen out of the order of the Commissioner (Appeals) impugned before us. From the photostat copy of the notice of the ITO in Form No. 28 along with the enclosure thereto, however, it is seen that Rs. 64,75,860 was taken by the ITO as the base being the total income on the basis of which tax under section 140A has been paid being that for the assessment year 1975-76. But the contention of the assessee's learned counsel was that the basis was wrongly made by the ITO adopting the last assessed income for the assessment year 1975-76, for the purpose of raising the demand under section 210. This contention apparently was not correct as pointed out above. Thus, the point raised by the assessee at this stage in the circumstance of the case cannot be said to have arisen out of the order of the Commissioner (Appeals) and the issue would involve investigation of facts and basic materials have to be brought on record, which point was not dealt with by the authorities below. From a copy of the assessee's letter dated 22-3-1984 in reply to the show-cause notice issued by the ITO, such contention has not been raised that the demand under section 210 was made on wrong basis or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proving that an estimate of advance tax submitted by the assessee was false to his knowledge or was believed by him to be inaccurate, is on the Income-tax Department. In the case of Anwar Ali amongst other things and on the facts of that case, it was held that offence under section 28(1) (c) of the Indian Income-tax Act, 1922 ('the 1922 Act') was for concealment of income and whether the assessee had concealed the particulars of his income or deliberately furnished inaccurate particulars thereof and the burden is on the department to establish that receipt of the amount in dispute, constitutes income of the assessee. It was also held that if there is not evidence except the explanation given by the assessee which has been found to be false, it does not follow that the receipt constitutes his taxable income. 13. We have gone through the different submissions made before us and the decisions relied on by the assessee. We are of the opinion that the ratio relied on by the assessee, i.e., P. Arunachala Mudaliar's case would not be applicable as the facts of the present case were distinguishable inasmuch as in the present case it is not the case of the assessee that there was a sudden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spurt of income came suddenly later on. Of course, this could not have been the case of the assessee as the estimate was filed on 15-12-1977, i.e., after the close of the accounting year itself, as mentioned earlier. 15. It is also not the case of the assessee that the nature of the business was so uncertain that it was not possible to predict the trading results correctly at any point of time and as such, it was not possible to estimate such income for the whole year correctly. 16. In a similar situation in the case of United Asian Traders Ltd. v. CIT [1970] 77 ITR 711 (Cal.), the Hon'ble High Court held that the Tribunal was right in coming to the conclusion that the ITO had materials to be satisfied that the estimate made by the assessee for which the assessee had reasons to believe that such estimate was untrue. The facts of that case were that the assessee filed an estimate of advance tax and tax payable was nil. Return was filed later on disclosing the positive income and the assessment was made at a higher income. For the following year a notice of demand of advance tax was made and the assessee filed an estimate at nil and the advance tax payable at nil. The income ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils on the basis of which an estimate was filed on 15-12-1977 at Rs. 82 lakhs although such facts lay within the special knowledge of the assessee. The assessee has not placed any material to show that the estimate filed by it was an honest attempt and the same was bona fide. On the other hand, the ITO has indicated in the order that the assessee had filed the estimate on 15-12-1977, i.e., after the close of the accounting year at Rs. 82 lakhs whereas on the basis of such accounts the income was returned by the assessee at a much higher figure, i.e., Rs. 1,35,66,110 which was assessed by the ITO at Rs. 1,44,00,100. The ITO referred to the quantum of the returned income obviously to show that the extent of the estimate made by the assessee which it knew or had reasons to believe to be untrue. We are of the opinion that the Commissioner (Appeals) was not justified in this context to say that the ITO has imposed the penalty merely on the factum of the difference of the estimated income and the returned income or the assessed income. This approach of the Commissioner (Appeals) is wrong on the facts of the case. 20. In a similar situation in the case of Jalannagar Tea Estate (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UF) [WT Appeal Nos. 605 and 610 (Cal.) of 1984], the Tribunal have agreed with the contention of those assessee who are connected with the present assessee-company that they could not made payment on self-assessment of tax before furnishing of the returns. In those cased it was contended by the revenue that there was no sufficient cause for the assessee not to pay the tax within the time allowed. The assessee submitted that because of the raid in the office of the company as well as in the residence of the directors, the books of account were seized and thereafter the settlement petition was filed which as a result, the affairs of the company were in a state of disarray. It was held by the Tribunal in the case that the assessee was prevented by sufficient cause from paying the self-assessment tax before filing of the returns and, hence, it was not considered to be a fit case for imposition of penalty under the Wealth-tax Act, 1957. The present assessee's contention is that the same cause and reasons would also be relevant for consideration in respect of the proceedings under section 273(a) presently before us. In our opinion, as discussed above, we find no material or fact to say t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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