Advance tax estimate penalty requires proof of a knowingly false estimate; bona fide uncertainty defeated penalty here.

Penalty under section 273(a) for an alleged untrue advance tax estimate requires proof that the estimate was knowingly false or without reasonable basis on the filing date. The assessee's estimate was made on 15 September 1971 using income then reasonably ascertainable, while share income from partner firms could not be finally determined because their accounts were closed later amid disputes. The estimate also aligned with the earlier loss position. On those facts, the estimate was treated as bona fide and not untrue, so no penalty was leviable and the penalty was cancelled.

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Issues: Whether the estimate of advance tax furnished by the assessee was an untrue estimate so as to attract penalty under section 273(a) of the Income-tax Act, 1961.

Analysis: The assessee had filed the estimate on 15 September 1971 on the basis of the income then reasonably ascertainable. The share income from the partner firms could not be finally determined at that stage, their accounts having been closed only later because of disputes between the partners. The estimate of Rs. 35,000 was consistent with the earlier loss position and could not, on the facts available when it was filed, be treated as knowingly false or without basis.

Conclusion: The estimate was not an untrue estimate and no penalty under section 273(a) of the Income-tax Act, 1961 was exigible.

Final Conclusion: The penalty imposed on the assessee was cancelled and the appeal succeeded.

Ratio Decidendi: Penalty for filing an untrue advance tax estimate is not leviable where, on the date of filing, the estimate was made on a reasonable and bona fide basis and the correct income could not then be ascertained with certainty.

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