S. 273B refers to “reasonable cause” which depends on the facts of the case. Amongst the landmark judgements, you can consider Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) which is a foundational judgment on penalties. The Supreme Court held that penalty is not automatic for every breach. It is a quasi-criminal proceeding and should not be imposed merely because it is lawful to do so. Penalty is inappropriate for technical or venial breaches, or where there is a bona fide belief that the assessee is not liable. It requires deliberate defiance, dishonest conduct, or conscious disregard of obligations. This principle applies to s. 273B as well.

Similarly, Assistant Director of Inspection (Investigation) v. Kum. A.B. Shanthi (2002) 255 ITR 258 (SC) is a landmark case on ss. 269SS/271D/273B (cash loans/deposits) where the Court upheld the constitutional validity of these provisions but clarified that s. 273B provides relief/mitigation. If there is a genuine and bona fide transaction and the assessee proves reasonable cause (e.g., urgency or circumstances preventing compliance via account payee cheque/draft), the penalty authority has discretion not to impose penalty. Undue hardship is mitigated by s. 273B.