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TMI Blog2013 (9) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was purchased in U.P. by paying concessional rate of tax. At the relevant time, normal rate of tax was 15% but the concessional rate as per scheme of the Government, 2.5% tax was paid. For the loss of tax, the A.O. has issued a notice, to which on 20.03.2001 reply was sent by the assessee. Prior to it, on 04.02.2000, the assessee suo moto deposited the difference of tax i.e. 15-2.5 = 12.5% , which comes to Rs.1,09,88,551/-. Finally, the A.O. has rejected the explanation of the assessee vide order dated 10.04.2001 but adjusted the amount, which was deposited by the petitioner - assessee voluntarily, and created a demand of Rs.52,45,357/- mainly pertaining to interest. Being aggrieved, on 15.12.2001, the assessee- petitioner has filed an appeal before the appellate authority, who has remanded the matter back to the A.O. for fresh adjudication under section 3-B. Not being satisfied, the department has approached the Tribunal, who vide its order dated 28.07.2003 has confirmed the order passed by the First Appellate Authority. So, in pursuance to the order passed by the appellate authority, the A.O. again passed an order on 12.12.2003, under section 3-B of the Act and crated balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss. Learned counsel for the petitioner - assessee also submits that there was no use of Form III-B as Tendu Patta was used as a raw material for manufacturing of Bidi in the factory located outside the State but the manufactured Bidi was sold within the State of U.P. There has been no breach of any provision of the Act. For the purpose, he relied on the ratio laid down in the case of M/s Polestar Electronic (Pvt.) Ltd. vs. Additional Commissioner Sales Tax and another reported in 1978 (1) SCC 636; and another case reported in (2004) UPTC 44; Commissioner of Trade Tax vs. S/s Kalpataru Udyog Ghaziabad. He submits that the proceeding initiated under section 3-B were wholly misconceived. When it is so, then there is no occasion to initiate the penalty under section 4-B(5) of the Trade Tax Act. To show the bonafide action on the part of the assessee, learned counsel also submits that even before receiving the notice, the assessee voluntarily has deposited the amount. Lastly, he made a request that the penalty proceedings initiated by the A.O. may kindly be quashed by setting aside the impugned orders. On the hand hand, Sri H. P. Srivastava, learned Additional Chief Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited with the exchequer, no penalty will be levied and if already levied then it would be waived. The assessee took the advantage of this scheme and deposited Rs.4,31,000/- being 10% of the interest amount by challan dated 29.06.2006 within a period of ten days from the order passed by the Tribunal dated 19.06.2006 (Appeal No.174 of 2003). Thus, the assessee has deposited the total interest amount as well as tax amount. Regarding the quantum, the matter is still pending for adjudication before the Hon'ble Supreme Court who has already granted leave vide order dated 04.01.2013, as prima facie case was made out. But it is crystal clear that the Tax demand, as raised by the A.O., has already been deposited by the assessee along with interest, as stated above, and nothing is due. In the scenario, the A.O. has initiate the impugned penalty proceedings. It may be mentioned that the Hon'ble Calcutta High Court in the case of Durga Kamal Rice Mills vs. Commissioner of Income Tax; (2004) 265 ITR 25 has observed that : "In quantum proceedings, a particular provision might be attracted for addition to the income of the assessee. But when it comes to the question of imposition of pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased Tendu Leave after payment of the Tax on concessional rate. The said raw-materials was exclusive used for the finished goods, which were sold within the State of U.P. Perhaps due to cheap labour, raw-material was sent outside the State on temporary basis but the same was returned in the form of finished goods to the State of U.P., where it was finally disposed by way of sale. Moreover, in the instant case, the assessee has not concealed any particular or any transaction. Everything was disclosed to the A.O. For the inter State Trade or Commerce, the penalty is liveable under section 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 assessee has already deposited the difference of Tax. Thus, the tax was already paid @15% along with interest. Hence, there was no loss to the revenue. There was no attempt to conceal any transaction. In these circumstances, we find no justification for levy of the penalty specially when the quantum appeal has not attained the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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