G.S.SINGHVI, J. - (1.) IN this appeal filed under S. 260A of the IT Act, 1961 (for short, the Act), the appellant has sought determination of the following questions of law: "(i) Whether in the facts and circumstances of the case, Annexures P -1 to P -3 are legally sustainable ? (ii) Whether in the facts and circumstances of the case, the order of the Tribunal upholding the imposition of penalty especially when the replies had been filed by the assessee -appellant is legally sustainable ? (iii) Whether in the facts and circumstances of the case, the order of the Tribunal, in upholding the imposition of penalty even when the issue of surrender of import entitlements being included in the estimate of advance tax was not a confirmed position of law, is legally sustainable ? (iv) Whether in the facts and circumstances of the case, the order Annexure P -3 sustaining the imposition of penalty when the Revenue had failed to discharge the onus of proof as imposed on it by law, is legally sustainable ? (v) Whether in the facts and circumstances of the case, the confirmation of the imposition of penalty is legally sustainable in spite of the specific mandate provided by the Court in CIT vs. Pratap Chand (1980) 14 CTR (P&H) 410 : (1980) 124 ITR 653 (P&H) : TC 49R.937 (vi) Whether in the facts and circumstances of the case, the sustaining of the imposition of penalty on the estimate of advance -tax filed by the assessee while not following the mandatory provisions of S. 274(1) of the IT Act, 1961, is legally sustainable.
(2.) THE facts necessary for deciding the appeal are that the appellant -assessee initially filed an estimate of advance tax on 11th Aug., 1981, showing a total income of Rs. 2,17,820. On 15th Dec., 1981, it filed a revised estimate in Form -29 showing an income of Rs. 44,00,000 and paid tax amounting to Rs. 27,06,000. The return of income was filed on 29th Aug., 1982, in which the assessee declared a total income of Rs. 58,26,380. The assessment was completed under S. 154 (sic) of the Acton 15th April, 1986, at an income of Rs. 1,03,12,120, but in pursuance of order, dt. 22nd Aug., 1991, passed by the Tribunal, it was worked out at Rs. 1,02,23,174. In the meanwhile, the AO initiated penalty proceedings under S. 273(2)(aa) of the Act and vide order, dt. 22nd Jan., 1991, he imposed penalty of Rs. 4,44,100. The CIT(A), Patiala, partly accepted the appeal filed against that order and reduced the amount of penalty to Rs. 2,22,050 by making the following observations : "I have carefully considered the arguments for the appellant and find some force in these. Before the learned AO, the appellant did not file any reply in response to show -cause notice. At the first appeal stage before me, the learned counsel for the appellant confined his arguments only to the appellant's bona fide belief at the time of filing the estimate of advance tax that profit on import entitlements amounting to Rs. 31,29,819 was not taxable as mentioned in the appellant's written submissions dt. 11th March, 1992. It is, however, seen that penalty would be leviable even if the amount of Rs. 31,29,819 is excluded from the assessed income. In fact, penalty would be leviable even if the amount of Rs. 31,29,819 is excluded from the assessed income. In fact, penalty would be leviable even on the basis of returned income which did not include the aforesaid amount of Rs. 31,29,819 as would be clear from the following details : Rs. Returned income 58,26,380 Income -tax payable on returned income 34,95,828 Surcharge @ 2.5% 87,395 Total tax payable 35,83,223 83.33 per cent of the tax payable 29,85,900 Less : Advance tax paid 27,06,000 It is seen that the appellant's accounting period for the year under consideration ended on 3rd Aug., 1981, and the estimate of advance tax in question was filed by the appellant on 15th Dec., 1981, i.e., 5 -1/2 (sic) months after the close of the accounting period. The appellant must, therefore, have been aware of its income for this year when it filed the estimate of advance tax on 15th Dec., 1981. No reason has been given for the appellant as to why the income estimated in the estimate of advance tax is much less than even the income returned, and the circumstances show that the appellant must have been aware of its true income when the estimate of advance tax was filed, the accounting year of the appellant having ended 5 -1/2 months before the filing of the estimate of advance tax. The rule of evidence in income -tax proceedings is preponderance of probability and in view of the facts mentioned above, it looks highly probable that the appellant knew or had reasons to believe that the estimate of advance tax filed by it on 15th Dec., 1981, was untrue. Penalty under S. 273(2)(aa) is, therefore, held to be exigible in the facts and circumstances of the instant case. Regarding calculation of penalty and the appellant's contention that the penalty should be imposed at the minimum rate after excluding the amount of Rs. 31,29,819 from income assessed, I find that the calculation of penalty is statutorily prescribed and has to be adhered to. Once penalty is held to be exigible, it has to be calculated with reference to assessed tax, and no discretion is given to any authority to alter the figure of assessed tax by excluding therefrom the tax payable on items of income, the taxability of which could not be envisaged by an assessee at the time of filing the estimate of advance tax. If such items of income are found included in the assessed income then it could, at best, be a mitigating circumstances, keeping in view which, minimum penalty may be imposed, as in the matter of calculation of penalty, the only discretion vested in assessing/appellate authorities is to impose penalty ranging from 10 per cent to 150 per cent. Therefore, the appellant's plea that tax payable on the aforesaid income of Rs. 31,29,819 should be excluded from the assessed tax for the purpose of calculation of the impugned penalty, cannot be acceded to. However, this is indeed a mitigating circumstances and I am of the view that in view of this mitigating circumstances, only minimum penalty @ 10 per cent should have been imposed. The penalty of Rs. 4,44,100 imposed by the learned AO at the rate of 20 per cent is accordingly reduced to minimum penalty leviable @ 10 per cent i.e., Rs. 2,22,050."
(3.) THE second appeal filed by the appellant was dismissed by the Tribunal by assigning the following reasons : "After considering the rival submissions, we are of the view that there is no merit whatsoever in the arguments advanced by the counsel for the appellant on the question of onus. As rightly contended by the learned Departmental Representative the onus shifts to the Revenue only after relevant information is placed by assessee on record. In the present case there was a shortfall of Rs. 2,78,900 vis -a -vis the estimate filed and returned income itself which excluded the income an account of import entitlements. Further, as rightly noted by the CIT(A), the previous year of the assessee ended on 30th June, 1981, and the estimate was filed in December, 1981, showing estimated income of Rs. 44 lakhs and in response to specific query from the bench, the learned counsel could not indicate as to how the aforesaid figure had been worked out. It may be appreciated that this is the case of a private limited company whose accounts are audited and the report of the auditor is dt. 16th April, 1982. The net profit as per P&L a/c was worked out a figure exceeding a crore of rupees and it is not possible to accept that in December, 1981, when the estimate was filed, the assessee had no inkling as to what was its estimated income. A perusal of the order passed by the Tribunal in quantum appeal, shows that the assessee conceded that the sum on account of import entitlements was taxable and the decisions in the past had been against it. The learned counsel did not place on record the earliest judgment of the Tribunal which had taken a view against it on the point at issue. In the final analysis, we uphold the action of the CIT (A) in confirming the penalty under S. 273(2)(aa) on the assessee." Shri A.K. Mittal referred to the provisions of ss. 28(iii)(a) of the Act to show that the profits of Deficiency 2,27,900 import entitlements were made exigible with retrospective effect from 1st April, 1962, by the Finance Act, 1990, and argued that the non -inclusion of Rs. 31,29,819 representing the profits on import entitlements cannot be treated as an act of deliberately furnishing untrue estimate of advance tax so as to attract penalty under S. 273(2)(aa) of the Act. Learned counsel then submitted that the view taken by Allahabad High Court in Swadeshi Cotton Mills Co. Ltd. vs. CIT (1989) 79 CTR (All) 87 : (1989) 180 ITR 651 (All) : TC 14R.526 that the amount of profits on import entitlements is exigible as income from business was subject -matter of SLP No. 1049 of 1980 in which notice had been issued by the Supreme Court and, therefore, the petitioner had not included the profits on import entitlements in the estimate of advance tax, learned counsel further argued that the initial statement of advance tax filed on 11th June, 1981, showing an income of Rs. 2,17,720 was based on the income of previous year and the mere fact that at a later point of time, the revised estimate of advance tax showing an income of Rs. 44,00,000 had been filed cannot lead to an inference that the appellant had deliberately furnished an incorrect estimate of advance tax. Shri Mittal also pointed out that the accounts of the appellant had been audited on 16th April, 1982, and submitted that it cannot be accused of having concealed the income. In support of his arguments, Shri Mittal relied on the decisions of this Court in Addl. CIT vs. Bipan Lal Kuthiala (1975) 98 ITR 343 (P&H) : TC 49R.897 and CIT vs. Pratap Chand Maheshwari, (1980) 14 CTR (P&H) 410 : (1980) 124 ITR 653 (P&H) : TC 49R.937.;