2016 (12) TMI 3 - HC - VAT and Sales Tax

Imposition of penalty u/Sec. 78(5) - doubts in documents produced - Held that - In my view, no case is made out for interference in the order of the Tax Board as merely because the bill and GR appeared to have been prepared with the same handwriting, is no reason at all for coming to such a finding that goods were being carried with the intention of evasion of Tax. It is rather surprising that the AO merely on the basis of comparison of the bills and builty has come to such a conclusion which is wholly unjustified and it appears to have been done just to create an atmosphere of harassing the respondent and in my view, something more was required to be established which the AO has utterly failed and it appears that entire exercise has been done or have taken place sitting in the office and passing such an order which prima-facie does not even show a reasonable basis for imposing penalty. The order passed by the Tax Board is based on finding of fact and I find no error, illegality or perversity in the same so as to call for interference by this Court - petition dismissed - decided in favor of assessee.

Summary

Issues:
1. Imposition of penalty under Sec. 78(5) based on doubt.
2. Appeal against the penalty imposition.
3. Justification for penalty imposition.
4. Judicial review of the Tax Board's decision.

Analysis:
1. The case involved the imposition of a penalty under Sec. 78(5) based on doubt arising from the same handwriting on the bill and GR. The AO imposed the penalty without concrete evidence of tax evasion, solely relying on the similarity in handwriting. The Deputy Commissioner (Appeals) found the penalty unjustified and deleted it, emphasizing the lack of proof of forgery or fabrication.

2. The Revenue appealed the DC(A)'s decision before the Tax Board, challenging the deletion of the penalty. The Tax Board upheld the decision of the DC(A) and dismissed the Revenue's appeal, leading to the current revision petition by the Revenue against the Tax Board's order.

3. The Revenue contended that the penalty was justified as the driver/incharge failed to provide satisfactory evidence regarding the same handwriting on the bill and GR. However, the court found this argument insufficient to establish tax evasion and criticized the AO's decision as lacking a reasonable basis. The court highlighted that imposing a penalty based solely on handwriting similarity was unjustified and indicated a failure to prove tax evasion beyond doubt.

4. Upon review, the court concluded that the Tax Board's decision was based on factual findings and did not exhibit any error, illegality, or perversity warranting intervention. The court emphasized that the AO's action seemed aimed at harassing the respondent without substantial evidence of tax evasion, indicating a lack of proper justification for the penalty imposition. Consequently, the court dismissed the petition, affirming the Tax Board's decision as valid and well-founded.