Penalty for false income-tax estimate turns on bona fides, not merely disputed income, with remand for fresh consideration.

Penalty under section 273(b) depends on whether the estimate furnished under section 212 was knowingly or recklessly untrue; the decisive enquiry is the bona fides of the estimate, not merely whether the underlying income was disputed. The Tribunal erred in treating only undisputed income as relevant to the estimate, because the statutory test focuses on the assessee's knowledge and honesty when making the estimate. As no finding had been recorded on whether the estimate was deliberately false, the matter could not be conclusively determined on the existing material and was remitted for fresh decision in accordance with law.

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Issues: Whether penalty under section 273(b) of the Income-tax Act, 1961 could be sustained on the footing that the assessee's estimate under section 212(3) was liable to be judged only with reference to disputed income, and whether the Tribunal had correctly approached the question.

Analysis: The statutory scheme requires liability to penalty where an assessee furnishes an estimate under section 212 which he knew or had reason to believe to be untrue. The relevant enquiry is whether the estimate was deliberately untrue or whether it was honest and fair; the Tribunal's view that only undisputed income could form the basis of the estimate was held to be an incorrect approach. Since no finding had been recorded on the essential question whether the estimate was knowingly untrue, the reference could not be answered on the material before the Court.

Conclusion: The Tribunal had misdirected itself in law, and the matter was sent back for fresh decision in accordance with law.

Final Conclusion: No final answer was returned on the referred question; the penalty issue was remitted to the Tribunal for reconsideration on the correct legal basis.

Ratio Decidendi: Penalty under section 273(b) lies only where the estimate furnished under section 212 is knowingly or recklessly untrue, and the decisive enquiry is the bona fides of the estimate rather than whether the underlying income was disputed.

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