I don't understand this. Why? Are we so emotionaly damaged that we cannot accept that we didn't perform at the necessary level to grade up? A test shouldn't be so easy that a student passes without work. I am not for setting a student up to fail but I beleive a test should be a test. There should be an opportunity to pass or fail, otherwise it isn't really a test. How a student accepts disappointment is more important than how a student will accept a promotion. So why a student should never fail a test is beyond me. Perhaps you can explain this in more detail.
Because it reflects badly on sensei if they are putting their students up for testing when they aren't ready. When sensei allows a student to attempt a test, (s)he is essentially saying "I think this person is good enough to pass this test". If that turns out not to be the case, then it is embarrassing for everyone. I'm not saying people should pass regardless of how bad they are. I'm saying that people shouldn't be allowed to attempt the test if they are not good enough.