Knowingly false advance-tax estimates and transitional assessment timing kept the penalties under the 1922 Income-tax Act in force.

Penalty under section 18A(9)(a) of the Indian Income-tax Act, 1922 can be sustained where the surrounding circumstances show that advance-tax estimates were knowingly false; repeated and substantial understatement of estimated income, despite material available to form a realistic estimate, justified the inference of deliberate falsity and the Tribunal's factual findings were not open to fresh reappraisal. For transitional purposes under section 297(2), an assessment is completed when the assessing authority passes the assessment order, not when appellate or reference proceedings end, so assessments completed before 1 April 1962 remained governed by the 1922 Act rather than the Income-tax Act, 1961. The penalties were therefore sustained under the 1922 Act.

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Issues: (i) Whether penalties were properly levied under section 18A(9)(a) of the Indian Income-tax Act, 1922, on the footing that the assessee knowingly furnished false estimates of advance tax. (ii) Whether, for the assessment years 1957-58 and 1958-59, the penalties were governed by the Income-tax Act, 1961 under section 297(2)(g) instead of the Indian Income-tax Act, 1922 under section 297(2)(f).

Issue (i): Whether penalties were properly levied under section 18A(9)(a) of the Indian Income-tax Act, 1922, on the footing that the assessee knowingly furnished false estimates of advance tax.

Analysis: The estimates were filed near the close of each relevant accounting year, and in every year there was a wide and consistent disparity between the estimated income and the income finally assessed. The pattern was not isolated but recurring across all years. The surrounding circumstances showed that the assessee had sufficient material to form a realistic estimate, yet consistently put forward figures as low as nil, loss, or substantially below the eventual assessments. The Tribunal's factual findings were that the estimates were false to the assessee's knowledge, and in reference jurisdiction those findings could not be reappraised on a fresh view of the evidence.

Conclusion: The penalties under section 18A(9)(a) were validly imposed and are upheld.

Issue (ii): Whether, for the assessment years 1957-58 and 1958-59, the penalties were governed by the Income-tax Act, 1961 under section 297(2)(g) instead of the Indian Income-tax Act, 1922 under section 297(2)(f).

Analysis: Clause (f) of section 297(2) applies where the assessment was completed before 1 April 1962, while clause (g) applies where the assessment for the relevant year was completed on or after that date. The expression "assessment completed" was held to refer to completion by the assessing authority, not the final disposal of appeals or references. The appellate stages did not postpone completion of the assessment for the purpose of the transitional provision.

Conclusion: The applicable law for those years was also the Indian Income-tax Act, 1922, and not the Income-tax Act, 1961.

Final Conclusion: The reference was answered against the assessee and in favour of the revenue, with the penalties sustained under the 1922 Act for all the years in question.

Ratio Decidendi: For penalty under section 18A(9)(a), the court may infer deliberate falsity from the totality of circumstances, including repeated and substantial understatement of estimated income, and for transitional purposes an assessment is completed when the assessing authority passes the assessment order, not when appellate proceedings end.

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