Advance-tax estimate penalty requires proof of knowing falsity; a bona fide factual estimate will not sustain penalty.

Penalty under section 273(a) of the Income-tax Act applies only if the Revenue proves that the assessee furnished an advance-tax estimate it knew or had reason to believe was untrue. A mere difference between the estimate and the income later returned or assessed is not enough to sustain penalty, because an advance-tax estimate is inherently approximate. On the facts noted, the estimate was based on the books of account, the additions made did not by themselves displace the loss position, and the remaining matters were factually disputed without evidence of intentional distortion. Penalty was therefore not leviable.

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Issues: Whether penalty under section 273(a) of the Income-tax Act, 1961 was leviable for filing an estimate of advance tax for assessment year 1961-62 which was later found to be inaccurate.

Analysis: Penalty under section 273(a) is attracted only where the assessee furnishes an estimate which it knew or had reason to believe to be untrue. The burden lies on the Revenue to establish the requisite knowledge or reason to believe. An estimate of advance tax is inherently approximate, and a mere difference between the estimate and the income eventually returned or assessed does not by itself justify an adverse inference. The Tribunal found, on facts, that the estimate was based on the books of account, that the additions ultimately made did not by themselves negate the loss position, and that the remaining items involved factual controversy and no intentional distortion.

Conclusion: Penalty under section 273(a) was not leviable on the assessee.

Ratio Decidendi: Liability to penalty for an advance-tax estimate arises only when the Revenue proves that the assessee knowingly filed an untrue estimate; where the estimate is bona fide and the dispute is factual, no penalty can be sustained.

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