1979 (7) TMI 223 - HC - VAT and Sales Tax

Summary

Issues:
Imposition of penalty under section 15-A(1)(b) based solely on findings in assessment proceedings.

Analysis:
The judgment addressed the issue of whether the imposition of a penalty under section 15-A(1)(b) solely based on findings in assessment proceedings can be upheld. The case involved proceedings initiated for the assessment year 1965-66 due to the assessee's alleged concealment of turnover and furnishing of inaccurate particulars. The initial penalty imposition was challenged by the assessee and upon remand, a fresh order imposing the penalty was passed and upheld in appeal, despite a reduction in turnover. The revising authority relied on the assessment proceedings' findings that the books were not maintained in the ordinary course of business, along with surrounding circumstances, to justify the penalty, citing the Commissioner of Income-tax v. Anwar Ali case. However, the court emphasized that the burden to establish concealment and deliberate furnishing of inaccurate particulars lies with the department.

The judgment clarified that penalty proceedings are independent of assessment proceedings and must be decided based on independent evidence. It highlighted the Supreme Court's ruling in the Anwar Ali case, emphasizing that penalty proceedings are quasi-criminal in nature and require the department to establish the necessary facts to infer the assessee's guilt. The court noted that the legislation includes safeguards to restrict the exercise of power in limited cases, emphasizing that penalty imposition is not automatic in best judgment assessment and rejection of accounts.

The court further discussed the principles laid down by the Supreme Court in the Anwar Ali case, emphasizing that while the findings in assessment proceedings are good evidence, they are not conclusive and must be examined along with surrounding circumstances. The revising authority's failure to consider these principles comprehensively was highlighted, particularly in drawing unwarranted inferences from the absence of certain documents without solid evidence of deliberate concealment. Ultimately, the court allowed the revision, setting aside the revising authority's order and ruling in favor of the assessee, stating that in the absence of additional evidence beyond assessment findings, no penalty could be levied. The assessee was awarded costs, and the standing counsel's fee was also assessed.