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2011 (5) TMI 888 - HC - VAT and Sales TaxWhether the Tribunal VAT is correct in observing that the appellant has become liable for action of penalty under section 86 (10)(b) of the DVAT Act, 2004 automatically if the claim of deductions under rule 3(2) of the DVAT rule are denied for which the appellant has recorded the claim in the books of accounts? Whether the penalty becomes automatic under section 86(12) of the DVAT Act, 2004 where there is no tax deficiency at the time of filing of return with its proper claims as per rule 3(2) of the DVAT Rules without showing any deliberate action on the part of the appellant? Held that:- The claim was bona fide may be the assessee was not able to prove the same, even otherwise, we find that it was an arguable case. For this reason, we are of the opinion that the provision to sub-section (10) of section 86 could not be invoked in a matter like this. This condition stipulated therein is not satisfied and we, thus, decide the question of law No. 1 in favour of the assessee and delete the penalty imposed under section 86(10) of the Act. While ascertaining whether there is a tax deficiency or not, the question of bona fide on the part of the assessee is completely alien and irrelevant. Once the tax deficiency is found, sub-section (12) thereof comes into play, as per which, the penalty is leviable on the said amount of tax deficiency. Question of law No. 2 is thus decided in favour of the Revenue and against the assessee thereby maintaining the penalty under section 86(12) of the Act.
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