Sabyasachi Mukharji, J. -
(1.)On the 9th January, 1973, a notice was issued under Section 273 of the Income-tax Act, 1961, by the Income-tax Officer, J. Ward, Companies District II, Calcutta, whereby he informed the petitioner that in the course of assessment proceedings before him for the assessment year 1970-71, it appeared to him that the assessee had furnished under Sub-section (2)/(3) of Section 18A of the Indian Income-tax Act, 1922, or under Section 212 of the Income-tax Act, 1961, estimates of advance tax payable by the assessee for the assessment year 1970-71, which the assessee knew or had reasons to believe to be untrue. The assessee was asked to show cause why penalty should not be imposed upon the assessee under the Income-tax Act, 1961. It appeared that the petitioner had filed its estimate of advance tax under Section 212 of the Income-tax Act, 1961, on the 9th June, 1969. The income according to the said estimate was shown as Rs. 10,00,000. On 6th December, 1969, the assessee filed a revised estimate of advance tax and the income estimated was Rs. 7,00,000. The petitioner filed return for the assessment year 1970-71 on 28th September, 1970, showing an income of Rs. 9,79,411. On 23rd August, 1972, the petitioner filed revised return showing an income of Rs. 7,11,240. The said revised return was filed because the petitioner included in the original return a sum of Rs. 2,52,120, being the cash assistance received from the Government of India on the export of goods. The said sum was contended by the petitioner to be not taxable. As a result of the revised return filed, the petitiotioner excluded from his income Rs. 2,54,830, being receipts from sale of import entitlement and Rs. 2,52,120, being receipts by way of cash assistance from Government of India. The said two receipts were shown in Part D of the return as being not taxable. On the 9th January, 1973, the Income-tax Ofiicer issued the impugned notice under Section 273 of the Income-tax Act, and on the 10th January, 1973, assessment for the assessment year 1970-71 was completed. Thereupon, the petitioner moved this application on the 12th February, 1973, and obtained a rule nisi under Article 226 of the Constitution.
(2.)The assessed income as it appears from the assessment order was Rs. 13,11,561. In that income was included a sum of Rs. 53,836 on account of capital gains. Under Section 207 of the Act the assessee was not obliged to include this sum in its estimate of advance tax. The assessed amount included the amount of Rs. 2,52,120 and Rs. 2,54,830 on account of cash assistance on exports received from the Government of India and proceeds of sale of import entitlement respectively. Thus, the sum aggregated to Rs. 5,06,950. The petitioner contends that these two amounts were capital receipts but the revenue proceeded on the basis that these were revenue receipts and as such taxable. There were certain other expenses which were disallowed amounting to Rs. 68,319 and certain municipal taxes were disallowed amounting to Rs. 12,914. Therefore, according to the petitioner, the petitioner had returned the correct estimate. The petitioner, according to it, filed estimate excluding items which the petitioner was contending were not taxable as capital receipts. In that view, the petitioner contended that there were no materials as such before the Income-tax Officer for his satisfaction in the course of assessment that the assessee had furnished an estimate knowing it to be false or had reasons to believe the estimate to be untrue. On behalf of the petitioner it is further contended that whether the amounts received on transfer or assignment of import entitlement or the amount of cash assistance or export receipts from the Government of India were revenue receipts or capital receipts were questions of law and, as a matter of fact, after the decision by the Tribunal disallowing the petitioner's contention, a reference application is pending in this court on such question, of law. It was, therefore, contended that on the items on which divergent views were possible, on the items which raised question of law if an assessee was contending that the said receipts were not revenue receipts, the assessee could not be said to have filed estimate knowing it to be false or had reasons to believe that it was false. In the premises, it was contended that there was no material for satisfaction of the Income-tax Officer for issuing the impugned notice. On the other hand, on behalf of the revenue it was pointed out that in the previous year prior to filing of the estimate it was held by the Appellate Assistant Commissioner that these amounts were revenue receipts and was, therefore, taxable. It was further contended that the assessee's auditors had indicated that these amounts were revenue receipts. In the instant case, only a notice has been issued. The issue of a notice under Section 273 depends upon the satisfaction of of the Income-tax Officer in the course of assessment proceeding. There must be satisfaction of the circumstances mentioned in diffrerent clauses of Section 273. The satisfaction must be in the course of assessment proceeding but the satisfaction that is required under Section 273 is tentative and prima facie satisfaction. For the purpose of issuance of the notice it is sufficient if there was tentative and prima facie satisfaction which would justify embarking upon an enquiry as to whether the assessee was guilty of the offences mentioned in different clauses of Section 273. In the back ground of the facts and circumstances mentioned before, I am unable to accept the contention that there were no materials at all even to embark upon an enquiry as to whether the assessee knowing it to be false or had reason to believe that the estimate was not true had filed inaccurate estimate. It may be that the assessee will be able to satisfy the Income-tax Officer that he had no reason to believe that the estimate was false or that it did not know that the estimate was false because it was contending that the amounts disallowed on assessment were capital receipts. As I mentioned before, it is a matter of prima facie satisfaction. On the materials, in my opinion, it cannot be said that the materials were not such as to form tentative prima facie satisfaction sufficient to embark upon an enquiry into the question whether the assessee was guilty of offence under the different clauses of Section 273. Reliance was placed on an unreported judgment of A.N. Sen J. in Matter No. 90 of 1974 (Cal)--Burmah-Shell Oil Storage and Distributing Company of India Ltd. v. Income-tax Officer. There the facts were different. There what happened was that the assessee was proceeded against in penalty proceeding after completion of regular assessment for furnishing inaccurate particulars in the return. The assessee had disclosed all the particulars in Part IV of the return. The learned judge found that full detailed particulars and all relevant materials had been submitted by the assessee. After furnishing particulars, the assessee had contended that the assessee was entitled to the benefit of devaluation loss in case of depreciation and development rebate. On these materials the learned judge found that there was no concealment of any particulars of income and as such no basis for initiation of proceedings for concealment of income. Whether there are materials or not depend on the facts and circumstances of each case. In the instant case, in the years prior to the relevant assessment year the Appellate Assistant Commissioner had held that receipts were revenue receipts and in the background of the facts that the auditors of the assessee had advised the assessee that these were revenue receipts, in my opinion, it cannot be said that there were no materials for tentative satisfaction sufficient enough to entitle the Income-tax Officer to embark upon an enquiry whether the petitioner was guilty of the offence mentioned in Clause (a) of Section 273 of the Act.
(3.)In the aforesaid view of the matter, this application must fail and is, accordingly, dismissed. The rule nisi is discharged; interim order, if any, is vacated.