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TMI Blog1981 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,125 under s. 10(1) r/w sub-s. (3) of the same section of Compulsory Deposit Scheme (Income-Tax Payers) Act, 1974 (for short the Act, 1974). The assessee was liable to make a compulsory deposit on or before 15th Dec., 1976 but the deposit was made on 20th Dec., 1976. As there was delay in making the deposit, the ITO started penalty proceedings and issued show-cause notice under sub-s. (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Nanda, the ld. Deptl. Rep. before us that under s. 10, it is not necessary to consider the reasonable cause and that the levy of penalty is automatic, once the deposit is delayed. Firstly, we do not agree with Shri Nanda that penalty under s. 10(1) is automatic, if deposit is delayed. Secondly, the AAC has already held that the assessee was not prevented by any reasonable cause and for that re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepted then sub-s. (3) of s. 10 providing for a reasonable opportunity would become redundant and a mere formality. The law does not believe in encourage the formalities. It shows that the reasonable opportunity to be given in sub-s (3) of s. 10 is not a mere formality. If it is so, then the assessee may establish the reasonable cause and if it established then no penalty could be levied. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee stated before the ITO that he was under the belief that deposit was to be made by 31st Dec., 1976. No finding has been recorded by the authorities below that no such belief was entertained by the assessee. In our opinion, such belief constitutes reasonable cause. This being so, we do not upheld the finding of the AAC and cancel the penalty. 3. In the result, the appeal is allowed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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