1977 (10) TMI 67 - AT - Income Tax

Summary

Issues:
1. Imposition of penalty under sections 17(3) and 43 of the M.P. General ST Act, 1958.
2. Justification of penalty under section 43(1) of the Act.
3. Assessment of dishonest intention in not showing purchases from unregistered dealers liable to purchase tax.

Analysis:
1. The Appellant, engaged in coal mining, was assessed to tax under the M.P. General ST Act, 1958 for the calendar year 1964, with a penalty of Rs. 3,000 under section 17(3) and Rs. 5,000 under section 43 of the Act. The first appeal set aside the penalty under section 17(3) but upheld the penalty under section 43. The Appellant then appealed to the Tribunal under section 38(2) of the Act.

2. The main issue raised in the appeal was the justification of the penalty under section 43(1) of the Act. The Appellant argued that all sales were reported, and purchases from unregistered dealers liable to tax were disclosed during assessment. The Department had not objected to this practice previously. The Respondent contended that the non-disclosure of purchase turnover from unregistered dealers rendered the returns false and justified the penalty.

3. The Tribunal analyzed the requirement of dishonest intention for imposing a penalty under section 43. It noted that the Appellant's practice of disclosing purchases during assessment was in line with past practices, and the Department had not objected earlier. The Tribunal considered the substantial tax payments made by the Appellant and the absence of concealment in sales. It concluded that the Appellant did not act dishonestly by not showing a small purchase turnover in the returns. Therefore, the Tribunal allowed the appeal and set aside the penalty under section 43 of the Act.