Judgment:
V.K. Singhal, J.
1. The Income-tax Appellate Tribunal, has referred the following question of law arising out of its order dated March 25, 1981, in respect of the assessment year 1975-76 under Section 256(1) of the Income-tax Act, 1961 :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that no penalty was exigible under Section 273(a) of the Income-tax Act in the case of the assessee for the assessment year 1975-76 and cancelling the penalty of Rs. 2,557 ?'
2. The brief facts of the case are that the assessee is a limited company and in respect of the assessment year 1975-76 which is the first assessment year the accounting period ended on May 51, 1974. A notice was issued to the assessee under Section 139(2) of the Income-tax Act, 1961, for furnishing the return for the assessment year 1974-75. The return was filed, declaring nil income, which was accepted by the Income-tax Officer and the order to this effect was passed on September 13, 1974. An estimate was filed of advance tax on December 13, 1974, suo motu.
3. The provisions of Section 212(3) require an assessee hitherto assessed at the relevant time a notice under Section 210 to be issued by the Income-tax Officer asking the assessee to pay advance tax in accordance with that notice, and the assessee has to pay advance tax accordingly (sic). Thus if the assessee had already been assessed, the Income-tax Officer is requiredto pass an order under Section 210 asking the assessee to pay advance tax in accordance with the order passed by him, and this advance tax is to be computed on the basis of the last assessed income. No order under Section 210 was passed by the Income-tax Officer and the estimate of advance tax which was filed was alleged to be non est. The Income-tax Officer found that the estimate submitted by the assessee was untrue/ false and he charged interest under Section 217 and levied penalty under Section 273(a) of Rs. 2,557 for filing such estimate of advance tax.
4. In appeal filed before the Commissioner of Income-tax (Appeals), Rajasthan, it was found that the first year of accounts have been closed on May 31, 1974, and, thus, there is no previous year relevant to the year 1974-75, and, therefore, in pursuance of the notice issued under Section 139(2) a nil return was sent and the assessee's income was assessed as nil. The Commissioner of Income-tax (Appeals) was of the view that because there was no previous year 1974-75 relevant to the accounting year 1973-74, therefore, no question of making any assessment for the said year arises. Since the assessee had himself submitted that there is no liability to file the return, no assessment could have been made and, therefore, the estimate of the advance tax, which was filed by the assessee cannot be ignored. The order passed by the Income-tax Officer was upheld.
5. In second appeal preferred before the Income-tax Appellate Tribunal, it was observed that, since the assessee was assessed for the assessment year 1974-75, a notice under Section 210 was required to be issued by the Income-tax Officer to the assessee to make payment of advance tax. An assessee which was already assessed was not required to file an estimate. The estimate which was filed cannot be said to be untrue or false as it was not a valid estimate in the eyes of law. The decision of the Madras High Court in the case of CIT v. N.D. Georgopoules [1980] 125 ITR 630 was taken into consideration and it was held that there is no obligation on the part of the assessee to have filed the estimate of advance tax as it was already assessed to income-tax before the due dates for filing the estimates, and, therefore, the estimate which was filed on December 13, 1974, was not a valid estimate. There was no default under Section 212(3) of the Income-tax Act so as to attract the provisions of Section 273(a).
6. In CIT v. N.D. Georgopoules [1980] 125 ITR 630 referred to above, it was held by the Madras High Court that the question as to whether a particular assessee has been assessed earlier to income-tax does notdepend on the tax liability which may be quantified in the assessment. There may be no actual tax liability in the assessment and, therefore, the word 'assessed' in Section 212(3) refers only to the computation of income or to the determination of amount of tax payable. If the computation of income or the determination of the amount of tax has resulted in nil tax liability, it does not mean that the process of computation or the determination of the amount of tax is not an assessment. The provisions of Section 212(3) as it was existing at the relevant time, therefore, would be applicable even in a case where the assessment was made and nil tax liability was determined (sic). From this proposition of law, it would be seen that the assessee is under no obligation to file the estimate of advance tax. If the estimate of advance tax is filed even if there was no obligation to file such an estimate without notice or order served on an assessee under Section 210(3), then the estimate filed cannot be considered as having been filed under Section 212(3). The view which has been taken by the Tribunal cannot be said to be incorrect and, therefore, we are of the view that the Income-tax Appellate Tribunal was justified in holding that no penalty was exigible under Section 273(a) of the Income-tax Act in the case of the assessee for the assessment year 1975-76 and cancelling the penalty of Rs. 2,557. The reference is answered in favour of the assessee and against the Revenue.