Bogus declaration for tax exemption attracts mandatory minimum penalty; equitable reduction is impermissible once falsity is proved.

Production of a bogus declaration to claim tax exemption attracted penalty under section 6A(3), because the declaration was found to be created and used to secure an unlawful tax benefit, and the assessee remained responsible for documents filed on its behalf. Where the statute prescribed a minimum penalty, that minimum could not be reduced on an equitable or special-case basis once the bogus declaration finding was sustained. The mandatory character of the provision required enforcement of the statutory penalty to deter false claims and protect revenue.

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Issues: (i) whether penalty was exigible under section 6A(3) on account of production of a bogus declaration for claiming exemption; (ii) whether the Tribunal was justified in reducing the minimum penalty imposed under the statute.

Issue (i): whether penalty was exigible under section 6A(3) on account of production of a bogus declaration for claiming exemption

Analysis: Reassessment was made under section 12A after the authorities found that the assessee had produced a created and bogus declaration to obtain exemption. The material on record showed that the declaration was not genuine and had been used to secure unlawful tax benefit. A plea that the act was attributable only to the assessee's representative was not accepted, as the assessee remained responsible for transactions and documents filed on its behalf.

Conclusion: Penalty under section 6A(3) was rightly attracted and the assessee was liable to suffer penalty.

Issue (ii): whether the Tribunal was justified in reducing the minimum penalty imposed under the statute

Analysis: The statute prescribed a minimum penalty. Once the finding of bogus declaration was sustained, the adjudicatory authority had no basis to dilute the statutory minimum on a so-called special-case approach. Reduction of penalty was held to be inconsistent with the mandatory character of the provision and with the need to deter bogus claims and protect revenue.

Conclusion: Reduction of the minimum penalty was not justified and the original statutory penalty could not be diluted.

Final Conclusion: The penalty proceedings were upheld in principle and the Revenue's challenge to the reduction of penalty succeeded, resulting in rejection of the assessee's challenge.

Ratio Decidendi: Where a bogus declaration is found to have been produced for claiming tax exemption, the statutory minimum penalty under the taxing provision must be enforced and cannot be reduced on equitable considerations.

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