Penalty limit without quantified tax evasion: higher penalty set aside and capped at the statutory maximum

Where the tax sought to be evaded was not quantified, penalty could not be sustained beyond the statutory maximum. The authorities had not recorded any definite finding quantifying the evaded tax, so the revisional order was unsustainable to the extent it confirmed a higher penalty. The court held that only the maximum penalty of Rs. 5,000 could be imposed in such circumstances, and the amount already paid under interim orders was to be treated as penalty. The penalty order was set aside and modified accordingly.

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Issues: Whether penalty could exceed the statutory maximum when the tax sought to be evaded had not been quantified.

Analysis: The authorities did not record any definite finding quantifying the tax sought to be evaded. In the absence of such quantification, the penalty could not be sustained beyond the maximum permissible limit. The revisional order was therefore unsustainable to the extent it confirmed a higher penalty, and the amount already paid under interim orders was treated as penalty.

Conclusion: The penalty order was set aside and modified to hold that only the maximum penalty of Rs. 5,000 could be imposed where tax evaded was not quantified. The petition was allowed.

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