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2018 (12) TMI 770 - HC - VAT and Sales TaxImposition of penalty - receipt of amounts towards a contract, which the assessee had not disclosed in the returns - KVAT Rules - Held that:- On the mere ground of receipt of certain amounts towards mobilisation advance of a contract, there can be no penalty imposed alleging evasion of tax under Section 67, since there is no taxable activity carried out as such by the assessee as is detected by the Intelligence Officer. This is a clear case in which the assessee, though failed to disclose the amounts in the return, had however entered the same in the books of accounts and no work having been carried out in the subject year. The Intelligence Officer also did not conduct any enquiry as to the incidence of tax, which is the execution of the works contract - the penalty could only be of ₹ 10,000/- for not disclosing the receipt in the returns. A mere receipt of money, may attract liability to income tax, but sales tax could be levied only if there is a transaction of sale; which the Department has not proved in this case. The receipt alone cannot raise a presumption of taxable transaction or a computation of tax evaded. Unless there is a specific incidence of levy of tax shown, which is the initial burden cast on the Department itself, the Explanation casting only a reverse burden on the assessee cannot be resorted to. The question of law in favour of the assessee and against the Revenue - penalty of ₹ 10,000/- retained - appeal allowed in part.
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