Technical trade tax breach without concealment or mala fide intent cannot justify penalty under the compounding scheme.

Penalty under the U.P. Trade Tax Act was treated as unsustainable where the assessee had disclosed purchases, been assessed under the compounding scheme, and there was no rejection of books, concealment, revenue loss, or evidence of evasion. The only defaults were non-production of Form 31 at check posts and delayed intimation to the department, which were characterised as technical lapses. In the absence of mala fide intent or concealment, the penalty provision was held inapplicable and the penalty cancelled.

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Issues: Whether penalty under Section 15-A(1)(o) of the U.P. Trade Tax Act, 1948 was sustainable for alleged breach of Section 28-A when the assessee had opted for and been assessed under the compounding scheme under Section 7-D.

Analysis: The assessee was found to have disclosed the purchases and to have been assessed under the compounding scheme for the relevant and other years. The books of account were not rejected and the penalty was imposed only because Form 31 was not produced at the check posts and intimation to the department was delayed. The record did not show concealment of purchases, resale, loss to revenue, or any element of evasion. On those facts, the breach was treated as a technical lapse, and penalty was held impermissible in the absence of malafide intention or concealment.

Conclusion: The penalty was not sustainable and was liable to be cancelled in favour of the assessee.

Final Conclusion: The revision was allowed, the orders of the lower authorities and the Tribunal were set aside, and the penalty levied on the assessee was cancelled.

Ratio Decidendi: A mere technical or procedural breach, without concealment, evasion, or malafide intent, does not justify penalty under the trade tax penalty provision.

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