Reasonable cause requirement defeats penalty for delayed tax return filing and delayed payment under U.P. Sales Tax law

Penalty under section 15-A(1)(a) of the U.P. Sales Tax Act cannot be sustained for delayed filing of returns or delayed deposit of tax unless the authority records a finding that the assessee lacked reasonable cause for the default. Mere delay, or failure to seek extension of time, is insufficient by itself to justify penalty. The assessee's voluntary payment of interest, together with the surrounding conduct and the nominal nature of the delays, supported bona fides. On that basis, the penalty orders were set aside and the revisions were allowed.

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Issues: Whether penalty for delayed filing of returns and delayed deposit of tax under section 15-A(1)(a) of the U.P. Sales Tax Act was sustainable in the absence of a finding that the assessee had failed to show reasonable cause.

Analysis: Penalty under section 15-A(1)(a) is attracted only when the assessee fails to furnish the return or deposit tax within the prescribed time without reasonable cause. A recorded finding on the absence of reasonable cause is therefore necessary before penalty can be imposed. The absence of any application for extension of time does not, by itself, establish want of reasonable cause. The voluntary payment of interest and the surrounding conduct of the assessee were treated as supporting bona fides, and the delays were found to be largely nominal.

Conclusion: The penalty was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The revisions were allowed and the penalty orders were knocked off.

Ratio Decidendi: Penalty for delayed return or tax payment cannot be upheld unless the authority records a finding that the assessee lacked reasonable cause for the default; mere delay or failure to seek extension is insufficient.

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