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TMI Blog2018 (12) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... at penalty notice were issued to all applicant-assessee on 20.01.2015. Much prior to that, the assessee had, of its own, deposited the entire defaulted amount of TDS together with interest. Thus, the default together with interest had been cleared by the applicant-assessee before the same came to the notice of the assessing authority. The facts pertaining to imposition of penalty giving rise to the present set of revisions are as below: Sales/Trade Tax Revision Nos. Month Amount of T.D.S. Last Date of Deposit Actual Date of Deposit 361 of 2018 April, 2009 50,505 20.05.2009 04.03.2010 362 of 2018 May, 2009 3,73,452 38,788 20.06.2009 20.06.2009 07.12.2009 04.03.2010 360 of 2018 June, 2009 2,87,063 2,98,677 20.07.2009 20.07.2009 21.12.2009 29.03.2010 359 of 2018 July, 2009 1,31,479 1,36,846 20.08.2009 20.08.2009 21.12.2009 04.03.2010 367 of 2018 August, 2009 2,88,488 20.09.2009 12.04.2010 366 of 2018 September, 2009 1,57,460 20.10.2009 29.03.2010 365 of 2018 October, 2009 3,97,216 20.11.2009 15.04.2010 364 of 2018 November, 2009 81,774 20.12.2009 29.03.2010 363 of 2018 December, 2009 10,304 20.01.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision cited by either side has directly interpreted the statutory language and decided whether the penalty under Section 34(8) of the Act is mandatory or discretionary. Still the decision in the case of C.C.T. Vs. Bareilly Highways Projects Limited (supra) does hold, for the purpose of imposition of penalty, it may not be a material consideration that the assessee had already paid the defaulted amount of tax along with interest. In fact, in that decision itself, the court clarified, the imposition of penalty would remain a distinct provision where penalty may be imposed "to the extent permissible in law". However, it has not been clarified or elaborated as to the pre-conditions when penalty may be imposable as may lead to a logical inference that penalty would become imposable in every case of default to make or deposit the T.D.S. amount. 9. On the other hand the two decisions cited by learned counsel for the applicant-assessee hold where the assessee had cleared the default of tax together with interest, no prejudice had been caused to the revenue. Therefore, the penalties were deleted. However, these decisions were not brought to the notice of the Court in C.C.T. Vs Bareilly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be warranted. In contrast, the word 'shall' appears in the later part of the sub-section to indicate once such order imposing a penalty is passed, the assessee would be obligated to pay that amount of penalty as may be specified in the penalty order. Again, the assessing officer 'may' impose the quantum of penalty as per his discretion. Thus, he 'may' impose any penalty not exceeding twice the amount of the tax deductible at source. 13. The words 'may' and 'shall' having been used in two parts of the same sub-section providing for levy of penalty, it appears natural and logical to assign the normal grammatical meaning to those two words so as to preserve the essential and inherent difference in their grammatical sense or meaning. In the context of examining the discretionary or obligatory nature of consequences arising from such usage, it is seen, the legislature has used the word 'shall' in that sub-section while providing the consequence that visits an assessee upon a penalty order being actually passed. Normally, such a consequence providing for recovery etc. has to be mandatory. As such, to signify and/or emphasize that co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion with the assessing officer to impose such quantum of penalty as may not exceed twice the amount of defaulted amount. However, there is no prescription of a minimum penalty. Once such discretion exists, it has to be conceded that the assessing officer has to apply his mind to relevant facts such as the nature (admitted or disputed) of default; extent of default; the conduct of the defaulting assessee etc. to determine the quantum of penalty that may be justified. 17. In absence of any amount or rate or quantum being specified by the legislature by way of minimum penalty imposable, necessarily a minimum penalty of say one Rupee or such amount would have to be imposed in every case of default, even in cases where the assessing officer may otherwise feel satisfied with the explanation of the defaulting assessee and no higher penalty may thus be warranted or imposed. Plainly, such a construction would lead to meaningless if not absurd results. Such penalties if allowed to be imposed would serve no useful purpose either to the revenue or the assessee, besides resulting in wastage of government money and time. 18. Read in its entirety, though the language of section 34(8) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding. It has to be confined to the facts of that case. Thus there does not exist any real conflict between that judgment and the earlier consistent view of this Court. 21. In the present case, undisputedly the assessee rectified the default committed by it (during A.Y. 2010-11) together with interest before the end of the calendar year 2011 i.e. during A.Y. 2011-12. The revenue on the other hand did not realize the existence of that default or its rectification made by the assessee, till as late as 09.09.2014. This undisputed fact mitigates against the levy of penalty as the assessee was not caught having committed the default and it had made good the loss to the revenue before issuance of any notice of demand with respect to the defaulted amount etc. The loss suffered by the revenue, if any, became negligible and/or minimized. There survived no further legal justification to penalize such an assessee. That also appears to be the consistent view of this court in the judgments noted above with which I am in agreement." 9. Since the essential facts of the present cases are identical and the questions of law involved in such facts have been answered in the negative i.e. in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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