Technical delay in compulsory deposit attracts no penalty where full amount is paid; unexplained delay may justify only nominal penalty.

Penalty under section 10 of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 was treated as unsustainable for a one-day delay in the first year because the default was merely technical and the full amount had been deposited. For the second year, where there was no shortfall in quantum but the deposit was delayed by 11 days without satisfactory explanation, the penalty was held to be sustainable only in a limited form and was reduced to a nominal amount.

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Issues: Whether penalty under section 10 of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 was leviable for delay in making compulsory deposit, and if so, to what extent it should be sustained.

Analysis: The delay of one day in the first year was treated as a merely technical default where the full amount required under the Act had been paid, and the penalty was therefore cancelled. For the second year, the deposit was not found to suffer from any shortfall in quantum, but the payment was delayed by 11 days without satisfactory explanation. In these circumstances, the penalty was held to be sustainable only to a limited extent and was reduced to a nominal amount.

Conclusion: Penalty was cancelled for the first year and reduced to Rs. 250 for the second year, with the balance directed to be remitted if collected.

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