Reasonable cause for delayed compulsory deposit defeated penalty where payment followed the next banking day after a Saturday due date.

Penalty for delayed deposit under section 10 of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 was held unwarranted where the assessee deposited the amount shortly after the due date, the due date fell on a Saturday, and payment was made on the next banking day. The first year of the compulsory deposit requirement and the surrounding circumstances were accepted as constituting reasonable cause for the delay. On that basis, the appellate cancellation of penalty was sustained and the assessee succeeded.

---

---

Issues: Whether penalty under section 10 of the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 was exigible for delayed deposit, or whether the assessee had shown reasonable cause for the delay.

Analysis: The assessee deposited the compulsory amount a short time after the due date, which fell on a Saturday, and the deposit was made on the next banking day. The first year of the compulsory deposit requirement and the surrounding circumstances were accepted as furnishing a reasonable explanation for the delay. In view of the accepted explanation and the absence of sufficient grounds to disturb the appellate order, the penalty was not warranted.

Conclusion: The penalty was rightly cancelled and the assessee succeeded on the issue.

---