Penalty under Section 78: assessee entitled to pay only 25% of the amount, with full penalty on default.

Penalty under Section 78 of the Finance Act, 1994 was sustained, but the appellants were found entitled to the benefit of paying only 25% of the penalty in terms of the cited High Court decision. The authorities had not extended that concession, so the appellants were permitted to discharge 25% within the stipulated time, with the full penalty becoming payable on default.

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Issues: Whether, while sustaining penalty under Section 78 of the Finance Act, 1994, the appellants were entitled to pay 25% of the penalty amount.

Analysis: The penalty under Section 78 was upheld, but it was found that the authorities below had not granted the appellants the benefit of paying 25% of the penalty in terms of the cited High Court decision. The appellants were therefore permitted to discharge only 25% of the penalty within the stipulated time, failing which the full penalty would become payable.

Conclusion: The appellants were held entitled to the option of paying 25% of the penalty imposed under Section 78 of the Finance Act, 1994, while the penalty itself was sustained.

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