Reasonable cause defeats advance-tax penalty where bona fide belief on taxability supported the assessee's omission.

Penalty for failure to furnish an advance-tax estimate is not sustainable where the assessee shows reasonable cause based on a bona fide and objectively plausible belief that no tax was payable. The assessee relied on the assessment history of earlier years, in which the income was not treated as taxable, and this supported its belief that advance tax was not due by the prescribed date. On those facts, the omission to file the estimate was treated as arising from reasonable cause, so the penalty under section 273(b) was cancelled.

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Issues: Whether penalty under section 273(b) of the Income-tax Act, 1961 was exigible for failure to furnish an estimate of advance tax under section 212(3) of the Income-tax Act, 1961 when the assessee claimed a bona fide belief that its income was exempt.

Analysis: The assessee's failure to file the estimate by the due date was examined in the light of the surrounding assessment history, including earlier years in which the income had not been treated as taxable and the subsequent decision in the later year that the trust's income was liable to tax. On that basis, the belief that no advance tax was payable on or before the due date was found to be bona fide. The default was therefore treated as having been occasioned by reasonable cause.

Conclusion: The penalty under section 273(b) was not sustainable and was cancelled in favour of the assessee.

Final Conclusion: The appeal succeeded and the penalty for non-compliance with the advance tax estimate requirement was set aside on the ground of reasonable cause arising from the assessee's bona fide belief regarding taxability.

Ratio Decidendi: A penalty for failure to furnish an advance-tax estimate is not leviable where the assessee's omission is supported by reasonable cause based on a bona fide and objectively plausible belief that no tax was payable.

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