Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question of law for the assessment year 1971-72 : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that there was no invalidity in the imposition of penalty under Section 273(c) of the Income-tax Act, 1961, on the ground that the demand raised under Section 210 was not illegal?"
(2.) Shortly stated, the facts leading to this question are that on April 3, 1970, the assessee filed its return for the assessment year 1969-70 disclosing an income of Rs. 4,14,313 and also paid the tax under Section 140A of the Act. Subsequent to this, on August 3, 1970, the Income-tax Officer ("the ITO", in short) passed an order under Section 210 on August 3, 1970, requiring the assessee to pay as advance tax a sum of Rs. 1,85,044 relating to the assessment year 1971-72 (previous year 1970-71). This demand of advance tax under Section 210 was raised not on the basis of the income returned by the assessee before him for the assessment year 1969-70 at Rs. 4,14,313 as aforesaid, but on the basis of the income of Rs. 2,87,480 being the latest assessed income relating to the assessment year 1967-68.
(3.) The assessee, however, paid the instalments of advance tax in terms of the demand of the Income-tax Officer under Section 210 on September 15, 1970, and December 15, 1970, each instalment being of Rs. 61,681. On February 17, 1971, the Income-tax Officer revised his order under Section 210 and demanded advance tax of Rs. 9,22,366 on the basis of the returned income of Rs. 16,20,610 for the assessment year 1970-71. But, the assessee had not paid any tax by way of self-assessment under Section 140A till February 17, 1971, i.e., the date of revision of the demand by the Income-tax Officer. The assessee objected to the said revised order under Section 210 by a letter dated March 1, 1971, contending that no tax under Section 140A having been paid, it was not open to the Income-tax Officer to raise the enhanced demand under Section 210. On March 15, 1971, the assessee paid the final instalment of Rs. 61,681 according to the terms of the original order under Section 210 passed by the Income-tax Officer, on August 3, 1970.;