penalty under section 78, Other Topics

[jagannath prasad]

When scn under section 73 is for tax not-paid or short-paid, why do the adjudicating authorities not adjust the tax amount already paid while imposing penalty under section 78. E.g. In one case the assessee had deposited 18 lakhs under VCES. The department found that the total liability was 40 lakhs during the alleged period. In this case scn was issued for 40 lakhs and sought appropriation of 18 lakhs. The adj. authority confirmed 40 lakhs, appropriated 18 lakhs and imposed penalty of ₹ 40 lakh under section 78 when the fact is that only 22 lakhs was short declared.How far is adj authority correct in imposing 40 lakhs penalty.

Posts / Replies

[KASTURI SETHI]

Sir, You are absolutely right. It is gross injustice against the party.

What I think it is due to false declaration under VCES which is a very serious offence. Any defaulter was supposed to file true declaration under VCES. However, as per Section 111(3), procedure of Section 73 and 73 A is to followed. Regarding excess penalty only appeal is the remedy. Hope the assessee can get justice from the Appellate Authority.