It depends. Is the late reply really acceptable, and no problem? Is it necessary to mention the late reply at all? The context will change the reply. (Also note that "sorry I reply late" is not English; possibilities are "I'm sorry I replied late", or "I am sorry that I am replying late.")
Both are fine, or you could say "Never mind". But typically there is no need to say anything in reply.
Presumably the other person offered the apology for the late reply together with the actual reply. In your response, you may simply wish to react to the reply and not to the apology.