2014 (10) TMI 67 - HC - VAT and Sales Tax

Court rules penalty cannot be imposed based on provisional assessment alone under Section 77(8)

The High Court upheld the decisions of the Tax Board and Deputy Commissioner (Appeals), ruling that penalty cannot be imposed solely based on provisional ... Penalty u/s 77(8) - Provisional assessment - Held that:- Tax Board as well as the DC (A) have rightly deleted the penalty imposed by the AO taking into consideration the fact that merely on the basis of provisional assessment, penalty is not leviable. There is no basis for such imposition after all for imposition of penalty Assessing Officer has to come to a definite finding and conclusion and many things have to be proved, imposition of penalty is a serious matter and cannot be imposed in a casual or summary manner like in the present case therefor, on the basis of provisional assessment, oar estimation penalty cannot be levied and it has rightly been deleted. I do not find any illegality, irregularity and perversity, in the orders passed by the Tax Board as well as by the DC(A), as such, no interference is called for by this Court as no question of law is involved - Decided against Revenue. Issues:Assessment based penalty under Section 77(8) of the Act on provisional assessment.Analysis:The petitioner challenged the order of the Rajasthan Tax Board, which rejected the appeal and upheld the deletion of penalty imposed by the Assessing Officer (AO) under Section 77(8) of the Act based on provisional assessment. The Deputy Commissioner (Appeals) also concluded that no penalty could be imposed on provisional assessment and quashed the penalty. The Tax Board concurred with this decision. The petitioner contended that both lower Appellate Authorities erred in reversing the AO's findings, arguing that penalty should be levied on provisional assessment.The High Court, after reviewing the arguments and orders, upheld the decisions of the Tax Board and the Deputy Commissioner (Appeals). The Court agreed that penalty cannot be imposed solely on the basis of provisional assessment. It emphasized that imposing a penalty requires a definite finding and conclusion by the Assessing Officer, with various aspects needing to be proven. The Court highlighted that the imposition of a penalty is a serious matter and cannot be done casually or summarily. Consequently, the Court found no illegality, irregularity, or perversity in the decisions of the lower authorities and dismissed the Sales Tax Revision Petition, stating that no interference was warranted as no question of law was involved.