Personal penalty requires deliberate violation, not mere negligence, and penalties on officers were set aside.

Personal penalty under Section 78A of the Finance Act, 1994 requires material showing deliberate, dishonest, or contumacious conduct by the officer concerned. Although the company's tax demand had already been settled under the Sabka Vishwas scheme, the individual penalties on the Managing Director and Chief Financial Officer were examined on merits. The record contained no evidence of conscious disregard of statutory duty or deliberate violation, and negligence alone was insufficient to sustain personal penalty. On that basis, the penalties were held unjustified and set aside.

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Issues: Whether penalties imposed on the Managing Director and Chief Financial Officer under Section 78A of the Finance Act, 1994 were sustainable.

Analysis: The demand against the company had already been settled under the Sabka Vishwas scheme, but the individual applications were rejected and the officers' penalties were still examined on merits. The record did not contain material showing that either officer had acted deliberately, dishonestly, or in conscious disregard of the statutory obligation. The finding of negligence by itself was not supported by evidence sufficient to attract personal penalty. In the absence of any material establishing contumacious conduct or deliberate violation, the penal provision could not be invoked.

Conclusion: The penalties on the appellants were not justified and were set aside.

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