penalty under section 78

[Guest]

When scn under section 73 is for tax not-paid or short-paid, why do the adjudicating authorities not adjust the tax amount already paid while imposing penalty under section 78. E.g. In one case the assessee had deposited 18 lakhs under VCES. The department found that the total liability was 40 lakhs during the alleged period. In this case scn was issued for 40 lakhs and sought appropriation of 18 lakhs. The adj. authority confirmed 40 lakhs, appropriated 18 lakhs and imposed penalty of ₹ 40 lakh under section 78 when the fact is that only 22 lakhs was short declared.How far is adj authority correct in imposing 40 lakhs penalty.

AI Summary

Section 78 Penalty Dispute: Participant Questions Penalty Imposed Despite Partial Payment Under VCES, Calls for Appeal. A participant questioned why adjudicating authorities do not adjust previously paid tax amounts when imposing penalties under Section 78, using an example where an assessee paid 18 lakhs under VCES against a total liability of 40 lakhs. Despite this, a penalty of 40 lakhs was imposed, even though only 22 lakhs was short-declared. The response indicated that this is unjust and attributed the penalty to false declarations under VCES, a serious offense. The reply suggested that appealing the penalty is the only remedy, hoping for justice from the Appellate Authority.