TMI Blog2013 (9) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... had not concealed any particular or any transaction - Everything was disclosed to the A.O. For the inter State Trade or Commerce, the penalty was leviable u/s 4-B(6) of the Act - but no penalty was levied under the said provision as there was no inter State Trade or Commerce - No finished goods were exported from the State - No sale was made outside the State - Raw-materials was received back in the form of finished goods - The assesse had already deposited the difference of Tax - the tax was already paid @15% along with interest - There was no loss to the revenue - There was no attempt to conceal any transaction. In the case of the BHAGWAN DASS VIJAY KUMAR MANDI DABWALI vs. COMMISSIONER OF INCOME TAX [1980 (4) TMI 10 - PUNJAB AND HARYANA High Court] - The penalty may not be imposed merely because there was a technical or venial breach and not deliberately defiance of law or conscious disregard of obligation by the assesse - The department must establish some sort of mens rea - There was no mens rea on the part of the assessee- petitioner as there was no concealment of any particular or transaction - The entire tax along with the interest was deposited before initiation of proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. The Hon'ble High Court also dismissed the Trade Tax Revision No.177 of 2006 vide order dated 29.08.2011. However, on 04.01.2013, the Hon'ble Apex Court in S.L.P. No.35805 of 2011 (Civil) granted leave and matter is still pending for adjudication. In the meantime, the A.O. initiated the penalty proceedings under section 4-B(5) of the Act. Being aggrieved the petitioner has filed the present writ petition. With this background, Sri Rakesh Ranjan, and Sri S. M. K. Chaudhary, learned senior counsel assisted by Sri Rahul Srivastava, learned counsel for the petitioner submits that the proceedings in quantum; and penalty are different. The matter of quantum is pending before the Hon'ble Supreme Court but in the meantime, the department has initiated penalty proceedings by issuing impugned notice/orders. To support his contention, learned senior counsel submits that on 13.06.2006, the State Government has started scheme regarding remission of the interest on satisfying condition of deposit of 10% of interest between 15.02.2006 to 30.06.2006; 90% of the interest amount would be waived. The petitioner deposited Rs.4,31,000/- being 10% of the interest amount, by challan dated 29.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Polestar Electronic (Pvt.) Ltd. (Supra) cited by the petitioner was pertaining to the Delhi Trade Tax Act and the same is not applicable in the assessee's case. He further submits that from a reading of the declaration Form along with Section 4-B, read with section 3-B and Rule 25-B(1) would lead to only one conclusion in the facts of the case that raw material covered by Form III-B has to be used for manufacture in a unit situate in the State of Uttar Pradesh and thereafter to be sold within the State. Lastly, he justified the impugned order/notice and made a request that the petition may be dismissed. We have heard learned counsel for the parties and gone through the material available on record. From the record, it appears that during the assessment year under consideration (1997-98), the assessee was engaged in the manufacturing and sale of Bidi. The assessee was granted exemption under section 4-B(2) of the Trade Tax Act. The Tendu Patta is a raw material to be used in the manufacturing of Bidi. With reference to exemption granted under section 4B(2) of the Act read with Rule 25-B(1) of the Trade Tax Rules, 1948, the assessee issued a declaration in Form III-B in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conclusively that the assessee owns the concealed amount." In this case, it was also observed that the Court could not looked into the finding arrived at by the authorities in the quantum proceedings and the same were not binding in the penalty proceedings. Hence, the proceedings in quantum appeal and penalty are quite different. Further, it may be mentioned that the penalty proceedings are not criminal in nature. They are certainly penal i.e. intended to punish. The question whether a given provision in a statute is a penal one or not, is sometimes not easy of comprehension. This is because the word 'penal' is somewhat ambiguous in its scope and content. A penalty may be the subject matter of a breach of statutory duty or may be the subject matter of a complaint. In ordinary parlance, the word 'penal' may embrace penalties for avoidance of civil liabilities which do not constitute offences against the State. This marked distinction is responsible for any statute intended to protect public revenue proceeding to speak of pecuniary penalties for any violation of its provision and also to specifically provide prosecution in an ordinary criminal court as if it is an offence or cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being satisfied prima facie. In the case of CIT vs. Smt. Kaushalya; (1995) 216 ITR 660, Hon'ble Bombay, High Court did not appreciate the show cause notice for penalty issued before proceeding in quantum appeal. In the case of the BHAGWAN DASS VIJAY KUMAR MANDI DABWALI vs. COMMISSIONER OF INCOME TAX (1983) 139 ITR 164 (P H), it was observed that the word 'proceedings' imposed referred to proceedings other than the penalty proceedings. In the following cases, the Court observed that the penalty may not be imposed merely because there is a technical or venial breach and not deliberately defiance of law or conscious disregard of obligation by the assessee. The department must establish some sort of mens rea : 1. Ganesh Travanera Agency vs. CIT; (1989) 177 ITR 455 (SC) ; and 2. Zoraster Vs. CIT; (1993) 201 ITR 558 (Raj) In the absence of mens rea, penalty generally is not liveable as per the ratio laid down in the case of Commissioner Sales Tax vs. M/s Sanjeev Fabrics; (2010) JT 10 SC 192. In the instant case, there is no mens rea on the part of the assessee- petitioner as there was no concealment of any particular or transaction. The entire tax along with the interest wa ..... 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