Waiver of penalty for reasonable cause bars penalty where statutory records show the true position and explanation is furnished.
Section 80 of the Finance Act, 1994 precludes imposition of penalty if the assessee proves a reasonable cause for the failure; the adjudicating authority must examine evidence and explanations. The Board's circular confines waiver power in certain proviso-based cases to situations where the true position is captured in statutory records (e.g., Profit & Loss accounts, Form 26AS, returns), creating distinct mitigation pathways when taxes and interest are paid before notice. Judicial decisions require claim and substantiation of reasonable cause and indicate that proven reasonable cause bars penalty when statutory records show the true position. (AI Summary)