1985 (8) TMI 349 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Justification of Penalty under Section 16(1)(e) of the Rajasthan Sales Tax Act, 1954.
2. Quantum of Penalty and Judicial Mind Application.
3. Modification of Penalty by the Revenue Board.

Detailed Analysis:

1. Justification of Penalty under Section 16(1)(e) of the Rajasthan Sales Tax Act, 1954:
The primary issue was whether the Board was justified in maintaining the penalty under Section 16(1)(e) for alleged concealment of particulars in the dealer-assessee's return for the accounting period 1st October 1970 to 30th September 1971. The dealer-assessee had shown certain transactions as inter-State purchases, which were taxable under the Rajasthan Sales Tax Act. The assessing authority found that the dealer-assessee had concealed taxable turnover amounting to Rs. 9,64,100.91, leading to a tax liability of Rs. 28,924.92. The penalty imposed by the assessing authority was Rs. 57,980 for deliberately furnishing inaccurate particulars. The Deputy Commissioner (Appeals) upheld the tax levy but nominally reduced the penalty to Rs. 57,846. The Board, after considering the circumstances, agreed with the assessing authority and the Deputy Commissioner (Appeals) that the penalty was justified. However, the High Court noted that the Board did not give proper consideration to whether there was conscious concealment or deliberate furnishing of inaccurate particulars, as required under Section 16(1)(e). The Court emphasized that mere non-disclosure of a large transaction is not sufficient to conclude an intent to conceal.

2. Quantum of Penalty and Judicial Mind Application:
The dealer-assessee argued that the Board committed an error in maintaining the quantum of penalty without considering what penalty would meet the ends of justice, especially given that the revised trading account and return were filed before the assessment was completed. The High Court observed that the Board was influenced by the magnitude of the concealed transactions and did not properly consider the voluntary filing of the revised return before the assessment was completed. The Court referenced cases like Anwar Ali [1970] 76 ITR 696 (SC) and Anantharam Veerasinghaiah & Co. [1980] 123 ITR 457 (SC), which established that for imposing a penalty, there must be a conscious concealment or deliberate furnishing of inaccurate particulars. The High Court found that the Board did not adequately consider these legal principles and the circumstances in their entirety.

3. Modification of Penalty by the Revenue Board:
The dealer-assessee contended that the Board erred in modifying the penalty imposed by the Commercial Taxes Officer instead of remanding the case for proper penalty imposition. The High Court noted that the Board should have considered whether the penalty was justified based on the circumstances and legal principles. The Court found that the Board's decision was influenced by the magnitude of the concealed transactions and did not properly consider the voluntary filing of the revised return.

Conclusion:
The High Court set aside the Board's order dated 27th August 1980 and directed the Sales Tax Appellate Tribunal, Ajmer, to redetermine the revision and decide the penalty issue in accordance with the law, considering the observations and legal principles discussed. The parties were to bear their own costs.