H.L. Karwa, J.M.—This appeal by the assessee is directed against the order of CIT(A)-II, Ahmedabad, dated 8th July, 1992, relating to assessment year 1984-85 confirming the penalty of Rs. 1,50,000 levied by the Assessing Officer under section 273(2)(a) of the IT Act, 1961.

2. Briefly stated the facts of the case are that the assessee-company in the relevant previous year ended on 31st Dec., 1983, was engaged in the business of marketing and distributing mass consumer products like synthetic detergents, washing soap, toilet soap, hair oil and industrial products, industrial detergents glycerine, etc. For the assessment year under consideration the assessee-company filed an estimate under section 209A(1) in Form No. 29 on 15th June, 1983, estimating its income subject to advance tax at Rs. 3,38,000 and advance tax payable thereon at Rs. 2,25,192. The advance tax instalments were also paid accordingly. The assessee filed its return of income on 10th Sept., 1986, declaring total income at Rs. 24,86,600 and tax payable thereon came to Rs. 16,97,105. The Assessing Officer completed the assessment on 27th March, 1987, determining total income at Rs. 26,86,310. However, the total income of the assessee was reduced to Rs. 26,85,130 in appeal by the CIT(A). According to the Assessing Officer, the advance tax payable on the basis of the estimate filed by the assessee was less than 75 per cent of the assessed tax and, therefore, he initiated penalty proceedings under section 273(2)(a) of the IT Act, 1961. The Assessing Officer also issued a notice to the assessee requiring it to show cause as to why a penalty under section 273(2)(a) of the Act, should not be levied for the default committed by it. A reply to the said show-cause notice was submitted by the assessee. It was also pleaded before the Assessing Officer that the accounts of the assessee-company was not completed at the time of furnishing the estimate and, therefore, the correct income could not be estimated. While rejecting the assessee’s contention, the Assessing Officer held that the actual figures of income for the assessment year 1983-84 were available with the assessee and, therefore, the estimate would have been based on those figures. The Assessing Officer further observed that the assessee-company had not cared even to file a higher estimate of advance tax fully knowing that its income for the year under consideration would be much higher. The Assessing Officer therefore, concluded that the assessee-company had furnished the estimate of advance tax payable by it and it not only knew to be untrue but it also had every reason to believe to be untrue. According to the Assessing Officer the assessee-company had failed to show any reason for the shortfall. In view of the above facts, the Assessing Officer levied a penalty of Rs. 10 lakhs under section 273(2)(a). Aggrieved by and classified with the order of the Assessing Officer, the assessee went in appeal before the CIT(A). It was contended before the CIT(A) that for the assessment year 1981-82, the assessee had suffered a loss to the tune of Rs. 24,42,886. However, the loss was determined by the Assessing Officer at a figure of Rs. 23,13,510. It was also submitted before the appellate authority below that for the assessment year 1982-83 the income of the assessee was determined at Rs. 2,84,700. It was also brought to the notice of the CIT(A) that the accounts for the period relevant to assessment year 1983-84 could not be penalised in time and the return of income was filed on 29-8-1983 disclosing the income at Nil figure. The assessee’s further contention before the CIT(A) was that at the time of filing of estimate on 15-6-1983, the assessee was aware of the fact that only a small portion of the loss determined for the assessment year 1981-82 had been adjusted against the income of Rs. 2,84,700 for assessment year 1982-83 and the balance of the loss was required to be set off against the income for assessment year 198