1975 (2) TMI 37 - AT - Income Tax

Summary

Issues:
Levy of penalty under s. 36(1) of the Tamil Nadu General Sales Tax Act, 1959 for the asst. yr. 1968-69.

Detailed Analysis:

1. Initial Assessment and Proposal of Penalty:
The assessing authority initially did not propose to levy any penalty despite finding sales suppressions during an inspection. However, upon scrutiny by the Dy. CIT, the assessing authority was directed to reconsider the levy of penalty under s. 12(3) of the Act. Subsequently, the assessing authority issued a notice proposing a maximum penalty of Rs. 10,782, which was contested by the appellant.

2. Contentions and Arguments:
The appellant argued that the assessing authority had already concluded the issue while making the assessment, citing legal precedents to support the claim that no penalty should be levied. The appellant also contended that as tax was paid immediately upon inspection, there was no tax omission, and therefore, no penalty should be imposed under s. 12(3).

3. Appellate Proceedings and Decision:
The appellant filed an appeal, reiterating their contentions and challenging the imposition of the penalty. The AAC reduced the penalty to Rs. 1,500 considering the appellant's voluntary payment of tax. However, dissatisfied with the relief, the appellant pursued a second appeal.

4. Judgment and Rationale:
The tribunal analyzed the case, emphasizing that the assessing authority's initial decision not to levy penalty amounted to a clear finding, precluding subsequent imposition of penalty. The tribunal held that the assessing authority's change of opinion did not grant jurisdiction to reconsider the penalty issue. Additionally, the tribunal noted that denial of the appellant's request to reconcile seized records for penalty purposes undermined the penal proceedings.

5. Conclusion and Decision:
Ultimately, the tribunal allowed the appeal, canceling the confirmed penalty of Rs. 1,500 imposed by the AAC. The tribunal's decision was based on the lack of jurisdiction for re-consideration of penalty, the appellant's actions in promptly paying tax, and the failure to provide the appellant with an opportunity to reconcile records.