Advance tax estimate penalty was cancelled where the assessee lacked awareness of increased income and had reasonable cause for omission.

Penalty under section 273(c) for failure to furnish an estimate of advance tax under section 212(3a) was considered in the context of whether the assessee was conscious that current income would exceed the income on which advance tax had been demanded under section 210. The article states that the duty to file an estimate arises only when such awareness exists, and that absence of consciousness of increased income may amount to reasonable cause rather than contumacious default. On the stated facts, the increase in income came through a partnership firm that had itself defaulted and been penalised, so the partner's omission was treated as coextensive with the firm's default. The penalty was cancelled.

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Issues: Whether penalty under section 273(c) of the Income-tax Act, 1961 was justified for failure to furnish an estimate of advance tax under section 212(3a) when the returned income exceeded the income on which advance tax was demanded under section 210.

Analysis: The liability to file an estimate under section 212(3a) arises where the assessee is conscious that current income is likely to be greater than the advance tax payable on the income estimated under section 210. If the assessee shows that he was not conscious of the increase in income, the omission to file the estimate cannot be treated as contumacious. Here, the increase in income arose from a firm in which the assessee was a partner, but the firm itself had also failed to file an estimate and had already suffered penalty for the same default. On these facts, the default of the partner was treated as coextensive with the firm's default, and the existence of reasonable cause was accepted.

Conclusion: The penalty was not warranted and was cancelled. The issue was decided in favour of the assessee.

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