Bona fide advance tax estimate defeats penalty where shortfall is marginal and wilful under-estimation is not proved.

Penalty for filing an under-estimate of advance tax was found unsustainable because the assessee filed the estimate on time, paid advance tax in line with that estimate, and the eventual shortfall was marginal. The record showed bona fide conduct in making the estimate, and the Revenue failed to prove that the estimate was knowingly false or that the assessee had reason to believe it was untrue. The alleged default was treated as only technical, and the statutory culpability needed for penalty was not established, so the penalty was cancelled.

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Issues: Whether penalty under section 273(a) of the Income-tax Act, 1961 was justified for filing an under-estimate of advance tax.

Analysis: The assessee had filed the estimate within time, paid advance tax in accordance with the estimate, and the shortfall between the estimated and finally determined tax was marginal. The material on record indicated that the assessee acted bona fide while making the estimate, and the Revenue did not establish that the assessee knew or had reason to believe that the estimate was untrue. On the facts, the alleged default was at best technical and the statutory guilt required for levy of penalty was not proved.

Conclusion: The penalty under section 273(a) was not sustainable and was cancelled.

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