Pre-deposit waiver in penalty dispute turned on disclosed transfer arrangement and doubtful prima facie suppression finding.

In a valuation dispute, the tribunal granted waiver of pre-deposit and stayed recovery of penalty because the alleged suppression in sales to a related company was not established at the interim stage. The appellant had disclosed the proposed transfer arrangement to the department, and completion of the transfer depended on statutory approval, including clearance under Section 269C of the Income-tax Act, 1961. On those facts, the department's assumption of immediate transfer and concealment was found to be prima facie doubtful, and the penalty issue was not treated as clear-cut for interim relief purposes.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery of the penalty; and whether, prima facie, the penalty was justified on the allegation that sales to a related company had been suppressed.

Analysis: The application arose in a valuation dispute where the duty had already been deposited and the penalty was challenged. The appellant had disclosed the proposed transfer arrangement to the department, and the transfer itself was dependent upon statutory approval, including clearance under Section 269C of the Income-tax Act, 1961. On these facts, the tribunal found that the department's view of immediate transfer and suppression was not free from doubt at the interim stage, and that the legal position had been treated in an overly simplistic manner for purposes of penalty.

Outcome: Pre-deposit of the penalty was waived and recovery of the penalty was stayed.

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