Reasonable cause for tax default rejected; minimum penalties upheld for failure to file estimate and compulsory deposit.

Statutory defaults in failing to file an advance tax estimate and make the compulsory deposit were treated as being without reasonable cause, so a plea of bona fide belief did not avail the assessee. The settlement order was read as not excluding penalty under the compulsory deposit scheme and as permitting penalty under the Income-tax Act in accordance with law, subject to the minimum leviable amount. On the facts, the raid, seizure of assets and subsequent settlement showed that the income position did not justify non-compliance, and the minimum penalties were upheld under section 273(1)(b) of the Income-tax Act, 1961 and section 10(3) of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974.

---

---

Issues: Whether the assessee had reasonable cause for not filing the advance tax estimate and not making the compulsory deposit, and whether the settlement order prevented levy of the minimum penalties.

Analysis: The settlement order did not exclude penalty under the compulsory deposit scheme and contemplated levy of penalty under the Income-tax Act in accordance with law, subject to the minimum leviable amount. On the facts, the assessee's plea of bona fide belief and reasonable cause was rejected because the raid, seizure of assets, and subsequent settlement showed that the income position could not be treated as one where no estimate of tax or compulsory deposit could be made. The defaults were held to be without reasonable cause, and the penalties imposed at the minimum prescribed were considered justified.

Conclusion: The penalties under section 273(1)(b) of the Income-tax Act, 1961 and section 10(3) of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 were upheld, and the assessee's challenge failed.

Final Conclusion: The departmental appeals succeeded and the cancellation of penalties by the first appellate authority was set aside.

Ratio Decidendi: Where statutory defaults in filing an advance tax estimate and making a compulsory deposit are shown to be without reasonable cause, bona fide belief will not avail the assessee and minimum penalty is sustainable in law.

---