M.M.Dutt, J. - (1.) In this appeal, the appellant, M/s. Jeewanlal (1929) Ltd., has challenged the propriety of the judgment of a learned single judge of this court dated March 9, 1976 (Jeewanlal (1929) Ltd. v. ITO [1978] 112 ITR 906), whereby the learned single judge discharged the rule nisi obtained by the appellant on its application under Article 226 of the Constitution.
(2.) The appellant is an assessee under the I.T. Act, 1961. For the assessment year 1970-71, the appellant filed an estimate of its income Under Section 212 of the I.T. Act at Rs. 10 lakhs and the income-tax payable thereon was estimated at Rs. 5,50,000. After adjusting the amount of income-tax deductible under Sections 192 to 195 of the I.T. Act, the balance amount of tax was estimated by the appellant at Rs. 5,06,950. On December 6, 1969, the appellant filed another estimate of its income under Section 212 of the I.T. Act, estimating its income at Rs. 7 lakhs and the income-tax payable thereon was Rs. 3,85,000, after adjusting the amount of tax deductible under the provisions of Sections 192 to 195 of the I.T. Act. After the appellant had filed the said second estimate of its income, on March 18, 1970, the ITO for the first time held that import entitlement was revenue receipt in connection with the return filed by the appellant for the assessment year 1965-66. The appellant, thereafter on September 28, 1970, filed its return of income for the assessment year 1970-71, declaring its income at Rs. 9,79,411 and computed the balance amount of income-tax payable thereon after adjusting the advance income-tax at Rs. 1,23,922.50 which it paid on October 26, 1970. In the meantime, the appellant had preferred an appeal against the assessment made by the ITO for the year 1965-66, holding, inter alia, that import entitlement was a revenue receipt. The AAC by his order dated February 3, 1972, came to the finding that import entitlement receipts were revenue receipts while dealing with the appeal preferred by the appellant relating to the assessment year 1965-66. On August 23, 1972, the appellant filed a revised return showing an income of Rs. 7,11,240. The second revised return was filed by the appellant because the appellant had included in the original return a sum of Rs. 2,52,120 being the cash assistance received by the appellant from the Govt. of India on the export of goods. According to the appellant, the said cash assistance was not taxable income. In the revised return filed by the appellant, the appellant deducted a sum of Rs. 2,54,830 on account of receipt from sale of import entitlements and the said sum of Rs. 2,54,120, being the receipt by way of cash assistance from the Govt. of India. The said two receipts were disclosed by the appellant in its return in Part " D " thereof as not being taxable.
(3.) The ITO, in the course of the proceeding for the assessment year in question, i.e., assessment year 1970-71, issued the impugned notice under Section 273(1)(a) read with Section 274 of the I.T. Act, 1961, calling upon the appellant to show cause why penalty should not be imposed on the ground that the appellant had filed an estimate of advance tax which it knew or had reason to believe the same to be untrue. Thereupon the appellant moved this court under Article 226 of the Constitution and obtained the rule nisi out of which this appeal arises.;