Reasonable cause under Section 80 must be considered before imposing penalty under Section 76

Penalty under Section 76 must be examined together with the assessee's plea of reasonable cause under Section 80, because that plea can affect the very imposition of penalty. Where the lower authority does not consider whether reasonable cause is established, the penalty decision is incomplete and requires fresh consideration. The discussion also notes the need to distinguish the penalty provisions and to apply relevant judicial guidance when redeciding the issue.

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Issues: Whether the order setting aside penalty under Section 76 required reconsideration in light of the possible applicability of Section 80 and the assessee's plea of reasonable cause.

Analysis: The impugned order did not deal with the assessee's specific plea that no penalty could be imposed if reasonable cause under Section 80 was established. Since the question of penalty under Section 76 could not be properly decided without examining that plea, the matter required fresh consideration by the lower authority. The appeal also referred to the distinction between the penalty provisions and the need to consider relevant judicial guidance while deciding the issue afresh.

Conclusion: The matter was remanded for fresh decision on the imposition of penalty under Section 76 after considering the applicability of Section 80.

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