Suhas Chandra Sen, J. - (1.) The Tribunal has referred the following two questions of law to this court under Section 256(1) of the Income-tax Act, 1961 : "(1) Whether, on the facts and in the circumstances of the case, and having regard to the facts that the assessee had by August 31, 1960, already earned substantial income, the Tribunal had relied on insufficient evidence and irrelevant materials to come to the finding that the estimate of advance tax payable furnished by the assessee on September 15, 1969, under Section 212 of the Income-tax Act, 1961, was not an estimate which the assessee knew or had reason to believe to be untrue ? (2) Whether, on the facts and in the circumstances of the case and having regard to the finding of the Tribunal that the assessee had already come to know about the upward revision of the price of the products and in view of the fact that the assessee itself made a sale on March 12, 1970, of its products at the revised higher price, the Tribunal had no evidence or had relied on irrelevant materials to hold that the revised estimate of advance tax payable furnished by the assessee under Section 212 of the Income-tax Act, 1961, on March 12, 1970, was not an estimate which the assessee knew or had reason to believe to be untrue and/or whether such finding of the Tribunal was otherwise unreasonable or perverse ?"
(2.) The assessment year involved is 1970-71. The assessee runs a steel re-rolling mill and is a member of the Steel Re-rolling Mills Association. The Income-tax Officer had issued a demand notice for payment of advance tax to the tune of Rs. 12,77,605. The notice was served upon the assessee on May 13, 1969. The assessee submitted an estimate of nil income on September 15, 1969. Subsequently, on March 12, 1970, the assessee submitted a revised estimate showing an income of Rs. 2,00,000 and a taxable income of Rs. 1,20,000. The assessment was ultimately completed on Rs. 9,74,341. This was brought down to Rs. 9,61,220 on appeal.
(3.) The Income-tax Officer initiated penalty proceedings under Section 273. The assessee's plea was that after the preparation of the revised estimate, the assessee received a circular from the association under which the sale price was increased by Rs. 100 per metric ton with effect from March 1, 1970.;