Penalty for tax evasion needs cogent proof of intent; incomplete Form-31 alone could not sustain restoration.

Penalty under the U.P. Trade Tax Act could not be restored where the first appellate authority had found that the transaction was supported by Form-C, reflected in the books, paid by cheque, and unaccompanied by prior misuse of Form-31. The Tribunal relied mainly on the possibility of misuse because Form-31 was incomplete and the cheque number was omitted, but it did not displace the appellate findings with cogent material. In the absence of a reasoned reversal of those facts and evidence showing an intention to evade tax, the penalty was unsustainable and the assessee succeeded.

---

---

Issues: Whether the Tribunal was justified in restoring penalty under Section 15-A(i)(o) of the U.P. Trade Tax Act on the facts found by the first appellate authority.

Analysis: The first appellate authority had recorded that the transaction was supported by Form-C, reflected in the books of account, made through cheque, and there was no prior misuse of Form-31 by the assessee. The Tribunal did not specifically displace these findings and proceeded mainly on the possibility of misuse because Form-31 was incomplete and the cheque number was not mentioned. Such a conclusion, without meeting the material findings already recorded in appeal, was not based on cogent material to establish an intention to evade tax.

Conclusion: The restoration of penalty was unjustified and the issue is decided in favour of the assessee.

Final Conclusion: The penalty order restored by the Tribunal could not be sustained on the facts found, and the revision succeeded.

Ratio Decidendi: Penalty for tax evasion cannot be sustained unless the finding of intention to evade tax is supported by cogent material and by a reasoned reversal of the relevant factual findings recorded by the appellate authority.

---