The Judgment of the Court was delivered by

Ajit K. Sengupta, J.:— The assessee, Birla Cotton Spinning & Weaving Mills Limited, has spinning and weaving mills at Delhi and ginning and pressing factories in Malout (Punjab), Kesrisingapur (Rajasthan), Fateha-bad and Sangaria (Haryana). The assessment years concerned are 1966–67 and 1968–69 for which the previous years ended on March 31, 1966, and March 31, 1968, respectively.

2. The ITO served a demand notice under s. 210 of the I.T Act, 1961, calling upon the assessee to pay Rs. 24,92,216 for the first year under reference and the assessee paid as per its estimate Rs. 2,50,897, For the second year under reference, the ITO demanded Rs. 5,34,332 under s. 210 of the I.T Act, 1961, and the assessee paid as per its estimate Rs. 3,35,000. The facts revealed for the first year under reference are that the assessee filed an estimate showing an income of Rs. 11.15 lakhs on August 30, 1965. It filed another estimate on November 23, 1965, showing an estimated income of Rs. 7,00,000. It substituted these estimates by another estimate on March 9, 1965, declaring an estimated income of Rs. 6.81 lakhs which consisted of business income of Rs. 3.40 lakhs and dividend income of Rs. 3.40 lakhs. The assessee submitted the return declaring income from property at Rs. 26,754, business income of Rs. 9,80,431 and dividend income of Rs. 3,38,937. Income was assessed by the ITO for the first year under reference only enhancing the business income from Rs. 9,80,431 to Rs. 10,01,752. The ITO started penalty proceedings against the assessee under s. 273 of the Act.

3. For the second year under reference, the assessee filed an estimate under s. 212 of the Act at Rs. 3,35,000, whereas income returned was Rs. 14,86,000. After giving effect to the appellate order, the income was finally assessed at Rs. 16,25,636. The ITO started penalty proceedings against the assessee in terms of s. 273 of the Act. The income which was finally determined was more than the income returned by the assessee. In the course of penalty proceedings, the assessee filed letters dated July 9, 1969, August 5, 1970, and February 23, 1972, and stated that the estimate was filed on the basis of condition (sic) by attaching a statement giving the actual profits on the basis of which income returned for the first year under reference was filed. The ITO rejected the contention of the assessee for both the years and levied penalty upon the assessee for both the years under reference.

4. When the assessee went in appeal to the AAC, he deleted the penalties levied upon the assessee for these two years. The AAC held that the assessee had a basis for submitting the estimates and that they were done on the basis of the figures of immediately preceding years and that the estimates were made on the trend of the business and that it was not proper to hold that the assessee knew or had reason to believe that the estimates were untrue.

5. The Revenue came up in appeal before the Tribunal for these two years under reference. The Revenue contended that prima facie it appeared that the AAC made out a case but on a close reading of the order, it would be found that he accepted blindly what had been stated by the assessee and that there was no primary evidence on the basis of which he could come to the conclusion that the estimates were not untrue. Thus, it was argued that the conclusion of the AAC was based upon irrelevant circumstances and that at the time when the estimates were filed, business accounts were before the AAC and he should have verified them to ascertain the correct position. The departmental representative argued that there was reason to disbelieve the assessee's version that it based the estimate on the trend of income as disclosed by the accounts. It was also contended that the assessee had made a random guess.

6. It was argued that what was the state of accounts at that time was not known and, hence, it was suggested that that position was to be looked into. It was also argued that the assessee belongs to a well-known group of industries having sophisticated administrative apparatus and also legal aid and as such it should show convincing evidence that the assessee had reason to believe that the estimate was not untrue. It was argued that it was unacceptable that the assessee could not judge the trend of business and that it did not have an idea as to what the business profit should be. It was argued that property income was not included in the estimate of income. Revenue also relied on the decision of the Calcutta High Court in the case of United Asian Traders Ltd. v. CIT, [1970] 77 ITR 711 and contended that the facts of that case are on all fours with the facts of the present case.

7. The learned counsel for the assessee, on the other hand, contended that the only discrepancy that could be found was in regard to ginning factories. The assessee had to deal with agricultural products and that the variation of yield would depend upon various factors with reference to agricultural products and that no yardstick could be found in that regard and as such when the assessee had given a basis and when the AAC found that basis to be proper, his orders for the two years required no interference. It was stated that the assessee had been always paying advance tax regularly as demanded and that it had paid more advance tax than what has become payable. He stated that in the immediately preceding year advance tax paid was Rs. 15.48 lakhs and tax demanded was Rs. 9.92 lakhs resulting in refund.

8. The Tribunal upheld the view taken by the AAC for these two years under reference. The Tribunal held that, on the facts and circumstances of the case, it is not possible to hold that the ITO could take the view that furnishing of estimate of advance tax payable by the assessee was such that it knew or had reason to believe it to be untrue.

9. On the aforesaid facts, the Revenue filed an application under s. 256(1) of the I.T Act, 1961, suggesting four questions. However, the Tribunal referred the following common question for the aforesaid two assessment years:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the orders of penalty for the assessment years 1966–67 and 1968–69 passed by the Income-tax Officer under section 273 of the Income-tax Act, 1961?”

10. In this case, penalty was imposed under s. 273(a) of the Act. The learned counsel appearing for the Revenue has submitted that the facts and circumstances of this case fully justified the imposition of the penalty under s. 273(a). The estimates filed by the assessee for the two years were untrue and the assessee had known or had reason to believe that the said estimates were untrue. There was no basis for filing the said estimates. The learned counsel for the Revenue has relied heavily on two decisions, one of the Madras High Court and the other of this court and has submitted that the facts of the said cases are almost similar to the facts of this case and the principles laid down therein should govern this case. The first desision relied on by the Revenue is in the case of Appavoo Pillai v. CIT, [1965] 57 ITR 41 (Mad). The other decision is in the case of United Asian Traders Ltd. v. CIT, [1970] 77 ITR 711 (Cal).

11. On the other hand, Mr. R.N Bajoria, learned counsel appearing for the assessee, has submitted that the AAC and the Tribunal have taken into consideration all the relevant facts in coming to the conclusion that the conditions precedent for imposition of penalty under s. 273(a) have sot been satisfied. The Revenue did not establish that there was any deliberate furnishing of untrue estimates. He has relied also on several decisions in support of his contention that merely because there is disparity between the estimated income and the assessed income, no penalty could be imposed under s. 273(a). Before dealing with the merits of the respective contentions, it is necessary for us to briefly refer to the decisions which have been relied on by the learned counsel appearing for the parties.

12. One of the decisions heavily relied on by the Revenue is in the case of Appavoo Pillai v. CIT, [1965] 57 ITR 41 (Mad). There, the assessee had several sources of income; one of them is a bus transport business. In September, 1953, the ITO issued a demand under s. 18A(1) of the Indian I.T Act, 1922, basing the demand on the latest completed assessment, which was that of the assessment year 1948–49. Under sub-s. (2), the assessee has the liberty of estimating his income and of paying advance tax in accordance with such estimate. In the estimate so submitted by him, he gave the estimated income as Rs. 25,000, but the total income as furnished by him came to Rs. 35,515. On assessment, however, his income was fixed at Rs. 90,759. The ITO thereafter proceeded to apply s. 18A(9) of the 1922 Act. In the view, therefore, that the assessee's estimate of income was untrue to his knowledge, the ITO imposed the penalty in question. The assessee's explanation was that the higher figure of the assessable income arrived at by the ITO was mainly due to disallowances of depreciation to the extent of about Rs. 20,000 odd. It was also claimed that part of the addition made by the ITO represented income which the ITO inferred should have been made in the year of account in order to justify certain investments made by the assessee immediately after the close of the year of account. It was contended accordingly that since these additions were made rejecting certain objections put forward by the assessee, the enhancement over the returned income did not represent the real income which the assessee could possibly have estimated and included in his estimate under s. 18A(2). This explanation was not accepted, principally for the reason that the assessee did not produce any basis for the estimate which he had made. Accordingly, the penalty was imposed. Even in the appeal before the AAC, no figures to justify the computation of the estimate made by the assessee were made available. The AAC upheld the imposition of penalty. In the further appeal to the Tribunal, the contentions again did not carry conviction to the appellate authority. The Tribunal was satisfied that the case fell within the scope of s. 18A(9) and dismissed the appeal. On those facts, the Madras High Court held that an assessee who makes an estimate of advance tax under s. 18A(2) is expected to make an honest estimate and he can do so only on the basis of the accounts which were available with him as on the date of the estimate. Where an assessee submitted an estimate of income for purposes of advance tax under s. 18A(2) and the income fell far short of the sum assessed on regular assessment and the assessee was not able to show that his estimate was justified by the state of accounts as they stood on the date of the estimate, the imposition of penalty under s. 18A(9) read with s. 28(1)(c) was lawful.

13. The next decision cited is in the case of United Asian Traders Ltd. v. CIT, [1970] 77 ITR 711. There, the assessee filed estimates of advance tax under s. 18A(2) of the Indian I.T Act, 1922, showing nil income and also showing the advance tax payable as nil for the accounting years 1958–59 and 1959–60. For one year, the income returned was Rs. 10,763 and for the other year Rs. 10,567. The assessment was completed for the year (1959–60) at Rs. 17,059 and for the second year (1960–61) on a total income of Rs. 12,974. The ITO imposed penalty under s. 18A(9) of the old Act for the aforesaid assessment years. It was contended before the AAC that the assessee's business was dealing in jute and hemp, and the fluctuation in prices of these commodities being very heavy, it was not possible to predict what would be the profit or loss of the business at the end of the year. On the dates on which the assessee had submitted the estimate under s. 18A(2) of the Act, the assessee's account showed business losses and the assessee had no reason to expect that there would be a profit at the end of the year for either of these two years. Therefore, it was contended that there was no reason for the ITO to be satisfied that the assessee had furnished the estimate which it knew or had reason to believe to be untrue. The appeal to the AAC was rejected. Before the Tribunal, it was contended that the assessee was entitled to file its estimates of income at any time under s. 18A(2) of the Indian I.T Act, 1922, and there was no obligation on the assessee to wait till the end of the accounting year before filing its estimate under that sub-section. As, in this case, the assessee made esti-mates 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, 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 and if the balance of these credit and debit notes received after the end of the year was not brought into account, the assessee's trading results would have been a loss and the assessee's estimate would have been confirmed. The Tribunal was of the opinion that if the assessee's contention was that the nature of the business it carried on was so uncertain that it was not possible to predict the ultimate trading results at any point of time, then it was not possible for the assessee to make an estimate of the profit or loss for the whole year, bona fide, right at the beginning of the accounting year, and it could not be said that the assessee had reason to believe such estimates to be correct and true. So far as the credit and debit notes were concerned, the Tribunal held that the assessee must have been in a position to know by March 15 of the subsequent year what amount of credit notes it was going to receive for the year ending on March 31. On these facts and in the circumstances of this case mentioned hereinbefore in the background of the assessee's business, this court held that the Tribunal was right in coming to the conclusion that the ITO had materials before him to be satisfied that the estimates were submitted by the assessee in this oase when the assessee had reason to believe them to be untrue.

14. In the case of CIT v. S.B Electric Mart P. Ltd., [1981] 128 ITR 276 (Cal), this court held that, if in a particular case, the estimate is filed at the close of the accounting period, that does not by itself establish that the estimate which is filed is not only false but also false to the knowledge of the assessee. Before the expiry of the accounting year, an assessee may or may not have a full picture of the result of the income earned in that year. The time for making that calculation comes at the time of filing of the return. Therefore, unless there is evidence to indicate that 10 or 12 days prior to or after the close of the accounting period, the assessee knew or had reason to believe that the estimate filed by him was false, it cannot be presumed, simply because he had filed it after the expiry of the accounting year, that he had such knowledge.

15. In the case of Ramnagar Cane & Sugar Co. Ltd. v. CIT, [1982] 134 ITR 609 (Cal), the assessee company carried on the business of manufacture and sale of sugar. Its previous year for the assessment year 1971–72 ended on August 31, 1970. It paid advance tax as demanded by the ITO under s. 210 of the I.T Act, 1961, on an income of Rs. 5.44 lakhs. The last instalment of advance tax was paid on January 15, 1971. On May 7, 1971, the books of account of the assessee company were audited and huge profits arose on the valuation of closing stock. The ITO completed the assessment under s. 144 on a total income of Rs. 26.50 lakhs which was reduced to Rs. 24 lakhs by the Tribunal. The ITO took the view that the assessee had failed to comply with the provisions of s. 212(3A) and imposed a penalty under s. 273 which was upheld by the AAC and the Tribunal. The court held that it could be reasonably said that the assessee had no idea as to the actual profits at the time when it had paid advance tax on the basis of profits earned in the immediately preceding year. Thus, there was no failure on the part of the assessee to file an estimate of such tax in terms of s. 212(3A). Moreover, the failure, if any, could not be said to have occurred without reasonable cause. Hence, the Tribunal was not justified in sustaining the order of penalty under s. 273.

16. In the case of Abhilash Kumari Oswal v. CIT, [1982] 138 ITR 277 (P&H), although the total income amounted to Rs. 65,025, the assessee did not file any estimate under s. 212(3). The assessee contended that though she was admitted as a partner in the firm, yet her admission as a partner was subject to the approval of the Company Law Board, which was received on April 26, 1965, and she became an absolute partner after the approval of the Company Law Board received after the expiry of the relevant accounting year. Accordingly, the share income of the firm could not be included in her estimate of advance tax under s. 212(3) of the Act. The Tribunal rejected the said plea and held that the assessee might have had some doubt in her mind but that doubt itself did not absolve the assessee from filing an estimate under s. 212(3) and that the imposition of penalty under s. 273(b) was valid. The High Court affirmed the view taken by the Tribunal.

17. Under s. 273(a) of the I.T Act, 1961, corresponding to s. 18A(9) of the 1922 Act, penalty may be imposed for furnishing false estimate of advance tax payable by the assessee. Section 273(a) provides that the ITO in course of the regular assessment proceeding has to be satisfied that the assessee has furnished under s. 212 an estimate of the advance tax payable by him which he knew or had reason to believe to be untrue. Under s. 210 of the Act, the ITO may require the assessee to pay the advance tax determined in accordance with the provisions of ss. 207, 208 and 209 of the Act. Since the advance tax is payable on the basis of the regular assessment or on the self-assessment made for the latest previous year, it may, therefore, bear no relation to the tax payable in respect of the income of the previous year relevant for the advance tax. Section 212 gives a right to the assessee to estimate his income of the relevant previous year and to pay the advance tax on the basis of his own estimate if his income is likely to be less than that on the basis on which the advance tax is determined. If an assessee wishes to displace the obligation imposed upon him by an order under s. 210, he has to file an estimate under s. 212. Such an estimate cannot be made with mathematical precision. The estimate in that sense can never be accurate. Whether an assessee had knowingly filed a false estimate or he had reason to believe that the estimate is untrue has to be determined on the facts and circumstances appearing in each case. An assessee, if he is carrying on business, has to make a fair estimate of the profits expected to be earned during the relevant previous year. The estimate has to be based on objective facts. The assessee is required to take into account the normal trend of his business up to the time when he is required to file an estimate. The trend of the business by an assessee may be inaccurate or incorrect but this will not necessarily make the estimate with regard to the income an untrue one unless it can be shown that such estimate was made without any basis at all. It is for the assessee to produce materials, the materials on which he has framed his estimate. It is for the Revenue to show that the materials on which the estimate is based are no materials and no reasonable estimate could be based on such materials. It is only then the Revenue can hold that the assessee has filed false estimate or he had reason to believe that the estimate is untrue. The burden of proving that an estimate of advance tax submitted by the assessee was false or inaccurate to his knowledge is on the Revenue. The question whether the penalty is imposable or not is essentially a question of fact. Several decisions which have been cited before us have laid emphasis on certain aspects which on the facts of those cases justified either the imposition or cancellation of the penalty. No positive rule can be laid down which will be applicable to cases of this nature. There must be evidence to show that ihe estimate filed by the assessee was false to the knowledge of the assessee or he had reason to believe it to be untrue. It will depend on the facts of a particular case whether there is evidence to prove the positive fact that the assessee has consciously filed an estimate which was false and false to his knowledge. Where the assessee offers an explanation and adduces evidence; the nature of the evidence may provide the material to come to the conclusion that the assessee deliberately filed false estimate of advance tax. The mere disparity between the estimate submitted by the assessee and the income he himself returned or the ITO finally determined in the assessment by itself will not justify imposition of penalty under s. 273 of the Act. Where there is a disparity and the disparity is enormous, mere self-serving statement of the assessee that he thought that his estimate represented the probable income of the year would not be sufficient to escape the liability under s. 273 of the Act. He has to justify the basis of his estimate. The estimate must be an honest estimate based on the accounts which are available with the assessee on the date of estimate. The knowledge that the estimate is untrue or which the assessee believes to be untrue must be at the point of time when he submits the estimate. The mens rea or the mental element must be adjudged with reference to the facts and circumstances appearing at the time when the estimate was submitted. Mens rea of the assessee at the time when he made the estimate could not be adjudged by his subsequent conduct in returning a larger income in the return than what was estimated for the purpose of payment of advance tax. The evidence, whether negative or positive, small or large, may show that an honest and fair estimate was made by the assessee and there was no conscious or deliberate furnishing of untrue estimate. In such a case, no penalty can be imposed.

18. It is in this background, we have to consider whether, on the facts of this case, the Tribunal was right in holding that no penalty can be imposed for deliberately furnishing an untrue estimate. Particulars of tax demanded, tax estimated, shortfall in payment, quantum of penalties, etc., are tabulated hereunder:

1966–67 1968–69 Rs. Rs. Tax demand under s. 210 24,92,216 5,34,332 Tax estimated under s. 212 2,50,897 3,35,000 Tax determined under s. 143(3) 5,20,266 8,03,845 75% of tax thereon 3,90,199 6,02,883 Short fall in payment 1,39,302 1,99,332 Quantum of penalty 19,500 25,000

19. For the assessment year 1966–67, the ITO levied penalty mainly on two grounds: (i) that the assessee did not include the property income of Rs. 26,254 for making the estimate for advance tax, and (ii) that the trend in increase in the profit of ginning and pressing factories was not taken into account at the time of making the estimate. The AAC held that the difference in the estimated income and the returned income was due to the profits from ginning and pressing factories. The difference between the income estimated and returned was Rs. 6.66 lakhs (Rs. 13.46—6.80). The AAC in holding that the difference was on ginning and pressing factories had taken into consideration the following statement:

Income as per estimate Income returned Difference (in lakhs of Rs.) (in lakhs of Rs.) (in lakhs of Rs.) Units: (i) Delhi Mills & Tent., etc. 39.00 40.22 1.22 (ii) Kathua Mills (—) 6.00 (—) 6.12 (—) 0.12 (iii) Ginning & Pressing Factories 8.50 14.71 6.21 ——— ——— ——— 41.50 48.81 7.31

Less Depn. & Development Rebate 34-70 lakhs.

20. From the aforesaid figures, the AAC held that there was practically no difference against the mills' accounts (Items (i) and (ii)) and substantial difference was in ginning and pressing factories' accounts (Item (iii)). The ginning and pressing factories of the assessee were situated at four places— one at Punjab, another at Rajasthan and the other two at Haryana. The estimate was filed on March 4, 1966, when the cotton season was in full swing. By that time, complete data of yield was not received from those four factories. The correct particulars of yield are generally available after 5/6 months of the close of the season, i.e, August or September. The assessee for the purpose of its estimate adopted the yield of the earlier year. Subsequently, it was found that the actual yield during the season of 1965–66 was much more than the 1964–65 season. The AAC compared the percentage of yield in different units with regard to kapas ginned and pressed for the season 1964–65 (assessment year 1965–66) with the season 1965–66 (corresponding to the assessment year 1966–67). He found that the yield with regard to quality No. 320F was higher being 34.65% in Malout Unit, 35-34% in Kesrisingpur unit, 34.90% in Fatehabad unit and 34.04% in Sabgaria unit, whereas in the immediately preceding year, with regard to the first year under reference, the yield in these units was 33-81%, 33.06% and 32.82%, respectively. He also noticed that the percentage of desi-cotton was higher during this year. He also found that the assessee had extra yield of 2,951 quintals of 320F cotton and 555 quintals of desi-cotton. He thus held that the assessee had reasonable explanation to offer with regard to the estimate of advance tax filed by it. On those facts, the AAC held that the assessee had a basis while submitting its own estimate. He also found that it was the basis of the immediately preceding year and that the estimate was also based on the trend of the business when the assessee furnished its estimate.

21. For the assessment year 1968–69, the difference between the income estimated and assessed was Rs. 8.75 lakhs (Rs. 16.25—Rs. 7.50). The ITO imposed penalty rejecting the contention of the assessee mainly on the ground that it was possible on the part of the assessee to make the estimate of the increased profit from ginning and pressing factories. The AAC found that the increase in profit was due to substantial increase in profit in ginning and pressing factories. He gave the following chart to come to the conclusion that the assessee filed the estimate on the basis of the conditions prevailing at that time:

1965–66 season 1966–67 season 1967–68 season (in lakhs of Rs.) (in lakhs of Rs.) (in lakhs of Rs.) October 28.16 21.45 30.24 November 122.25 68.24 88.84 December 120.44 127.63 115.11 January 53.04 113.79 86.63 ——— ——— ——— Total 323.89 331.11 320.82

22. In the next two months, February and March, the position was altogether different as may be seen from the following particulars;

February 10.98 17.77 92.26 March 4.06 5.13 98.78 _______ ________ _________ Total 15.04 2.90 191.04 ________ _________ __________

23. The AAC held that while for the season relevant for the assessment year 1968–69, February and March—purchases of kapas amounted to Rs. 191.04 lakhs, in the immediately preceding two years they were for Rs. 15.04 lakhs and Rs. 22.90 lakhs only. Secondly, the large purchases had pushed up the yield of cotton abnormally. According to the AAC, the assessee filed its estimate on the basis of the conditions then obtaining and on reasonably anticipated expectation. The ultimate results from the large purchases of kapas and the excess yield of cotton easily covered the difference of Rs. 8.75 lakhs in income in this assessment. According to the AAC, the assessee could not anticipate this sizable income while filing its own estimate in the middle of March, 1968.

24. Before the Tribunal, the Revenue did not dispute the facts and circumstances as brought on record by the AAC.

25. The Tribunal found that the difference in the estimated income and the income returned arose due to the profits from ginning and pressing factories, which were situated at four places—one at Punjab, another at Rajasthan and two at Haryana. The estimate for advance tax was prepared on the basis of the estimated profits of the various units. It was stated by the assessee before the ITO that the exact yield could be determined only in May/June, 1966, i.e, after the close of the accounting year. The Revenue did not verify the position as to whether before May/June, it was not possible to know the exact position. There is no evidence that in the factories at Rajasthan, Haryana and Punjab, there is a teleprinter system or telex communication so that the assessee could get information then and there. The Tribunal held that unless the verification was made, the ITO was not justified in holding that the increasing trend in yield was noticeable before furnishing the estimate. The assessee submitted the estimate based on materials of the previous years. The Tribunal also found that there was no mala fide intention in submitting the estimate of income in the manner it was done by the assessee. It could be found that in the earlier year, the assessee paid advance tax of Rs. 15.48 lakhs whereas tax assessed was Rs. 9.92 lakhs, resulting in a refund. The assessee filed three estimates during the first year under appeal—first at Rs. 11.15 lakhs, second at Rs. 7 lakhs and third at Rs. 6.8 lakhs. When the assessee filed the estimate against the demand of Rs. 24,92,216 for the first year, it noticed that there was a definite declining of profit and, as such, it first submitted the estimate at Rs. 11 lakhs and thereafter reduced it to Rs. 6.8 lakhs. Looking into the history from the assessment year 1964–65, it was found that the assessee paid advance tax of Rs. 22.70 lakhs whereas income assessed was Rs. 23.52 lakhs. Thus, it cannot be stated that the assessee was motivated not to pay the advance tax as demanded by the ITO under s. 210 of the Act. The Tribunal also took note of the fact that the ITO did not dispute that the statement as furnished and the explanation that was given were an afterthought. The findings of the ITO that increase in yield of cotton was noticed by the assessee from day to day before the filing of the estimates and that increased profit arose at the time of furnishing the estimate on March 9, 1966, and that there was no reason for anticipating fall in profit were not warranted by the materials on record. Actually as against the demand of Rs. 24,92,216 for the first year, there was income that was determined at Rs. 13,45,462 for the first year. Thus, there was reason for anticipating fall in income as compared to the demand raised by the Revenue. There were no laches on the part of the assessee with regard to the assessment year 1967–68 and there were no penalty proceedings started against the assessee for that year. It is for the assessment year 1968–69 that the ITO started penalty proceedings in terms of s. 273(a) of the Act. This, according to the Tribunal, would also go to indicate that the assessee had no mala fide intention of submitting untrue estimate. The AAC in his order stated that complete data of yield was not received from four units. The ITO did not challenge the finding of the AAC that correct particulars of yield were available after 5/6 months from the close of the accounting year. It was held that there is no evidence that at the material time, the assessee had the information that profit of the assessee would go up to such an extent as would warrant it to pay tax of Rs. 24,92,216. The assessee stated that results of yield could be taken from agricultural products and various other factors that would determine the position about the yield. It is not the case of the Revenue that in cases of ginning and pressing factories a normal incident was increase of profits or increase of yield. The AAC stated that the assessee did not know nor had reason to know the true position.

26. One other point was raised by the ITO in his order that the property income was not taken into consideration in filing the estimate and, as such, the assessee consciously failed to file the true estimates. The Tribunal held that property income was never shown separately while filing estimate of advance tax and that property was part of the assets of the assessee and, in such circumstances, it cannot be stated that the assessee omitted income from property with the oblique purpose to avoid payment of advance tax. Records do not indicate that for not showing the property income separately, the assessee was penalised with respect to estimate of advance tax filed by it either in the earlier years or in the subsequent years.

27. It appears to us that the Tribunal in confirming the order of the AAC took into consideration all the relevant facts. The real question is whether the assessee knew or had reason to believe that the estimates submitted by it were untrue at the time when the assessee made them. Since this related to the state of account at the point of time when the assessee submitted the estimates and it had business accounts before it when it made the estimates, if it could be shown that it based the estimates only on the trend of income as disclosed by the business accounts, notwithstanding the variation between its estimate and the final assessed figure, it could not be said that it had any reason to believe its estimates to be untrue. There is no evidence that at the material time, the assessee had the information that the profit of the assessee would go up to such an extent as would warrant it to pay the tax as demanded under s. 210 of the Act. The assessee adopted a particular basis for submitting the estimates which has not been challenged to be dishonest or mala fide. The trend in increase in the profit of ginning and pressing factories was not available with the assessee when the estimates were filed. Therefore, the assessee filed the estimates on the basis of the material of the previous years and material available at the time when such estimates were filed. The conduct of the assessee, which is a relevant factor, was also taken into consideration. For three years, the assessee paid an advance tax of Rs. 22.70 lakhs whereas the income for those years aggregated to Rs. 23.52 lakhs. Thus, no motive can be imputed to the assessee for not paying the advance tax as demanded under s. 210. The Revenue failed to establish that the assessee has consciously filed an estimate which was false and false to its knowledge. There was no circumstance which would justify the inference that the assessee knew its estimate to be untrue.

28. The concurrent finding of fact by the AAC and the Tribunal is that there was a reasonable basis for submitting the estimate. If that be the position, the estimates could not be characterised as estimates which the assessee knew to be untrue. Having regard to the facts and circumstances as appearing from the records, we are of the view that the Tribunal rightly held that it could not be said that the assessee furnished an estimate which it knew or had reason to believe to be untrue. Neither the approach nor the finding of the Tribunal can be said to be erroneous.

29. In the result, the question in this reference is answered in the affirmative and in favour of the assessee.

30. There will be no order as to costs. Leave is given to file the correct copy of the order of the Appellate Assistant Commissioner dated May 16, 1975.

Dipak Kumar Sen, J.:— I agree.