Y.R Meena, J.:— On an application under section 256(2), this court has directed the Income-tax Tribunal to refer the following questions, set out at page 7, for the opinion of this court:

“1. Whether, on the facts and in the circumstances of the case, the estimate of advance tax filed by the assessee under section 212(3A) of the Income-tax Act, 1961, filed on December 15, 1977, is a valid estimate in law?

2. Whether, on the facts and in the circumstances of the case, the order dated May 25, 1977, passed under section 210 of the Income-tax Act, 1961, is valid in law?

3. Whether in arriving at the conclusion and finding the Tribunal has ignored any relevant material or has relied on irrelevant material and whether such conclusion and finding is otherwise unreasonable and perverse?

4. Whether the Tribunal was justified in law in confirming the levy of penalty under section 271(1)(a) of the Act?”

2. In compliance with the direction of this court the aforesaid questions are referred for the opinion of this court. The assessee-company had filed its original return on November 15, 1978, and then revised returns were filed on December 13, 1978, and September 25, 1980. In the revised return on September 25, 1980, the assessee has disclosed its income at Rs. 1,35,66,110. The relevant assessment year is 1978-79. A notice under section 210 was issued to the assessee for the assessment year 1978-79, on May 20, 1977, demanding payment of advance tax of Rs. 36,08,768 on the basis of the total income of Rs. 64,75,960 for the assessment year 1975-76. The assessee filed an estimate on December 15, 1977, showing an estimate of income of Rs. 82 lakhs.

3. The Income-tax Officer noticed that the company's previous year ended on October 31, 1977. The books of account of the relevant assessment year 1978-79 were not seized, though there was a search conducted by the Department at the residence and business premises of the assessee on October 27, 1976. The Assessing Officer further noticed that the total income assessed for this relevant year was Rs. 1,44,00,100 and he has filed the estimate of income of Rs. 82 lakhs. As he has filed the false estimate of income which he knew or had reason to believe to be untrue, the penalty proceedings were initiated under section 273 of the Act and after hearing, the penalty of Rs. 1,90,000 was imposed by the Assessing Officer. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) was of the opinion that mere difference in the estimate filed and income returned is not sufficient to invoke the provisions of section 273 of the Act of 1961 and he further pointed out that there was an unsettled condition that followed in the wake of the raid conducted by the Department in 1976. Therefore, the estimate of income as required for advance tax has not been correctly filed.

4. In appeal before the Tribunal, the Tribunal has considered the various aspects including the fact that when there was a vast difference between the estimate filed and the income returned that too when the estimate has been filed after one and a half months from the closing of the accounting year. The Tribunal has restored the penalty imposed by the Assessing Officer.

5. Heard learned counsel for the parties. Learned counsel for the assessee has not pressed questions Nos. 1 and 2 referred by the Tribunal. Therefore, now we are concerned with questions Nos. 3 and 4, which relate to the issue whether the Tribunal has ignored any relevant material or relied on irrelevant material for the conclusion that there is a case for penalty. Further whether the Tribunal was justified imposing the penalty under section 271(1)(a) of the Act.

6. Learned counsel for the assessee, Shri Poddar, submits that there was a raid conducted by the Department at the residence and business premises of the assessee on October 27, 1976, and the books of account were seized. Therefore, the estimate as required under the provisions of the Act could not be filed. He further submits that in a notice under section 210 the total income shown was Rs. 64,00,960. The tax payable thereon was Rs. 36,08,768 and the assessee has paid advance tax of Rs. 41,12,500. He further submits that mere difference between the estimate of income submitted and the income shown in the return is not a basis for imposing penalty under section 271(1)(a) of the Act. He placed reliance on the decision reported in CIT v. S.B Electric Mart P. Ltd., [1981] 128 ITR 276 (Cal); Ramnagar Cane and Sugar Co. Ltd. v. CIT, [1982] 134 ITR 609 (Cal); CIT v. Birla Cotton Spinning and Weaving Mills Ltd., [1986] 157 ITR 516 (Cal); CIT v. Birla Cotton Spinning and Weaving Mills Ltd., [1985] 155 ITR 448 (Cal); CIT v. Pratap Chand Maheshwari, [1980] 124 ITR 653 (Commissioner Of Income-Tax v. Gemini Pictures Circuit (P.) Ltd., [1991] 188 ITR 101 (Mad).

7. Learned counsel for the Revenue submits that the statements were filed after one and a half months from the date of accounting year ending and difference between the estimate of income filed and the income shown in the return is almost 100 per cent, that is the income shown in the return is just double the income estimated for the purpose of advance tax under section 209A of the Act. The only inference in those circumstances that can be drawn is that the assessee has filed a false estimate which he knew or had reason to believe to be untrue.

8. Whether the Tribunal has ignored any relevant material or has relied on irrelevant material before we consider that fact we would like to refer to the decisions cited by learned counsel for the assessee that mere differences between the income estimated and the income shown in the return is not enough to impose the penalty.

9. In Ramnagar Cane and Sugar Co. Ltd. v. CIT, [1982] 134 ITR 609, the issue before this court was that the assessee-company carried on the business of manufacture and sale of sugar. The assessee-company paid advance tax as per demand in the notice under section 210 of the Income-tax Act, on an income of Rs. 5.44 lakhs. The last instalment was paid on January 15, 1971. On account of valuation of the closing stock, huge profits arose and the assessment was completed on the income of Rs. 26.50 lakhs. Inter alia, the question before their Lordships was whether there was a case for penalty under section 273 of the Act. This court has taken the view that the assessee had no idea as to the actual profits at the time when it had paid advance tax on the basis of the profits earned in the immediately preceding year. There was no justification in sustaining the order of penalty under section 273 of the Act.

10. In CIT v. Birla Cotton Spinning and Weaving Mills Ltd., [1986] 157 ITR 516, the issue before this court was 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 refund, in three years the assessee paid advance tax of Rs. 22.70 lakhs whereas the income for these years aggregated to Rs. 23.52 lakhs and no penalty proceeding has been started in respect of the assessment year 1967-68. The finding was that there was no evidence that at the material time when the assessee filed the estimate the assessee had knowledge that its profits would increase. When it was not in the knowledge of the assessee regarding increase in the profits, this court has taken the view that there is no case for penalty under section 273 of the Act.

11. In the case of CIT v. Birla Cotton Spinning and Weaving Mills Ltd., [1985] 154 ITR 448 (Cal), the assessee filed the estimate on the basis of material of the previous years and materials available at the time when the estimates were filed. Increase in the profit in the ginning and pressing factories was not available with the assessee when estimate was filed. This court has taken the view that there was no case for penalty.

12. In CIT v. Gemini Pictures Circuit (P.) Ltd., [1991] 188 ITR 101, the issue before the Madras High Court was that the sum paid as advance tax according to the estimate filed on March 30, 1968, was accepted as advance tax and given credit for under section 219 by the Income-tax Officer in the assessment proceedings. The Madras High Court has taken the view that it had to be taken into account for the purpose of computing the penalty under section 271(1)(a) of the Act.

13. In CIT v. Pratap Chand Maheshwari, [1980] 124 ITR 653, the issue before the Punjab and Haryana High Court was that when a partner whose only source of income is income from the firm and the accounts of the firm are not finalised, the estimate of the advance tax was based on the estimate of the firm. The Punjab and Haryana High Court has taken the view that there was no deliberate furnishing of incorrect estimate by the assessee.

14. In CIT v. S.B Electric Mart P. Ltd., [1981] 128 ITR 276, the issue before this court was that the estimate was filed just after the expiry df the accounting period, i.e, he filed the advance tax estimate on January 11, 1961, and the previous year ended on December 31, 1960. This court has taken the view that the estimate which is filed was not only false but also false to the knowledge of the assessee.

15. From the view taken in the aforesaid decisions it appears that the basic requirement for penalty under section 271(1)(a) is that the assessee should furnish a false estimate for advance tax which he knew or had reason to believe to be untrue. The penalties in the aforesaid judgments had been cancelled on a finding that the assessee had furnished the false estimate which he did not know or had no reason to believe to be untrue.

16. In the case in hand the admitted facts are that the books of account for the accounting year relevant to the assessment year were not seized by the income-tax authorities during the course of raid conducted on October 27, 1976. They are with the assessee from the first day of the accounting year till the estimate of income has been filed as required under section 209A of the Act. The year ending in this case is October, 1977, and the assessee has furnished the estimate on December 15, 1977. The tax on the assessed income is Rs. 79,14,159.75 per cent, thereof is Rs. 59,36,622. The assessee has paid advance tax during the financial year of Rs. 41,12,500. The difference between 75 per cent, of tax payable and the tax paid comes to Rs. 18,43,122. The minimum penalty under section 271(1)(a) is imposable at Rs. 1,84,312. When the books of account of the accounting year relevant to the assessment year in hand are with the assessee and the accounting year ended on October, 1977, the estimate has been filed on December 15, 1977. One and a half months was with the assessee after closing of the accounts. We see no reason why the assessee did not have in its knowledge the estimate even of 75 per cent, of the income assessed. The penalty in this case has been sustained not only on the ground of difference in the income disclosed in the return filed and the estimate of income furnished. That is of course one of the relevant factors, but there are other factors to draw inference that the assessee has filed the false estimate of income under section 209A, which he knew or had reason to believe to be untrue for the purpose of penalty. On these facts and circumstances of the case, it cannot be said that the Tribunal has committed a mistake in drawing an inference that the assessee has furnished a false estimate of income for advance tax, which he knew and had reason to believe to be untrue.

17. Thus in our view there is nothing wrong in the findings of the Tribunal that the assessee has filed the false estimate which he knew or had reason to believe to be untrue.

18. In the result, as questions Nos. 1 and 2 are not pressed, we decline to answer those questions. Question No. 3, we answer that the Tribunal has not ignored any relevant material and relied on irrelevant materials for its conclusion. The finding is not unreasonable nor perverse. Thus, we answer this question in favour of the Revenue and against the assessee. Thus the fourth question also we answer in the affirmative, that is, in favour of the Revenue and against the assessee.

19. The reference so made stands disposed of accordingly.