Case Law Details
Punjab Diesel Agencies Vs Commissioner Commercial Tax U.P (Allahabad High Court)
The Allahabad High Court allowed a revision against the order dated 30.01.2018 passed by the Commercial Tax Tribunal, Allahabad in Second Appeal No. 9 of 2018 for Assessment Year 2010-11 arising from penalty proceedings under Section 54(1)(2) of the U.P. VAT Act. The revisionist contended that the penalty was imposed solely because a best judgment assessment had been confirmed, disclosed turnover was enhanced, and an additional tax liability of ₹10,000 was determined, without any independent finding. The Revenue argued that the revisionist had failed to disclose the true and correct turnover.
The Court noted that although the books of account had been rejected and turnover enhanced, none of the authorities had recorded any finding that the revisionist had concealed turnover particulars or deliberately furnished inadequate particulars. It held that rejection of books of account and enhancement of turnover alone could not justify penalty under Section 54(1)(2) in the absence of positive material establishing deliberate concealment. Accordingly, the impugned orders were set aside, the revision was allowed, costs of ₹5,000 were awarded to the revisionist payable within two months, the question of law was answered in favour of the revisionist, and the matter was directed to be listed in chambers on 29.09.2026 for compliance.
Cases Discussed
- M/s. Shanker Rice Mills, Bareilly versus Commissioner of Sales Tax, reported in 1995 U.P.T.C. 822.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Sri Vishnu Kesarwani, learned counsel for the revisionist and learned ACSC for the respondent.
2. The present revision has been filed against the order dated 30.01.2018 passed by Commercial Tax Tribunal, Allahabad in Second Appeal No. 9 of 2018 for Assessment Year 2010-11 arising out of penalty proceeding initiated under Section 54(1)(2) of the U.P. Vat Act. The revision was admitted by this Court vide order dated 25.09.2019 on the following question of law:
“Whether under the facts and circumstances of the case, the learned Commercial Tax Tribunal was legally justified in upholding penalty levied under Section 54(1)(20 of the U.P. Value Added Tax Act, 2008?”
3. Learned counsel for the revisionist submits that the penalty has been imposed only on the basis of best judgment assessment being confirmed by the Tribunal and enhancement and suppress sale was determined and thereafter tax liability of Rs. 10,000/- was levied. Only on the said premise, the present penalty proceeding has been initiated without recording any independent finding. In support of his submission, he relies upon the judgment of this Court in the case of M/s. Shanker Rice Mills, Bareilly versus Commissioner of Sales Tax, reported in 1995 U.P.T.C. 822. He further submits that on the basis of rejection of books of account and marginal enhancement of disclosed turnover, penalty cannot be justified, against which the matter traveled up to the Tribunal but by the impugned order, the appeal was dismissed.
4. Learned ACSC supports the impugned order and submits that since the revisionist has failed to disclose true and correct turnover, therefore, the action is justified.
5. After hearing the parties, the Court has perused the record.
6. The record shows that the books of account of the revisionist was rejected and disclosed turnover was enhanced by enhancing tax liability of Rs. 10,000/-. The Assessing Authority on the basis of enhancement confirmed up to the Tribunal, initiated penalty proceeding under Section 54(1)(2) of the U.P. Vat Act. The record further shows that no finding has been recorded by any of the authorities that the revisionist concealed the particulars of his turnover or has deliberately furnished inadequate particulars of such turnover. Merely because in the assessment proceeding, the turnover disclosed by the assessee has been rejected and suppress sale has been enhanced, the same will not entitle the Assessing Authority for levying penalty under Section 54(1)(2) in absence of any positive material to show concealment of turnover was deliberate.
7. For levying the penalty, the authorities were duty bound to record finding that the revisionist had concealed the particulars of his turnover on the basis of cogent material to justify the levying of penalty. In absence thereof, the penalty cannot be justified.
8. In view of above, The impugned orders are set aside. The revision is allowed with a cost of Rs. 5,000/- awarded to the revisionist. The cost shall be paid within two months.
9. Question of law is answered accordingly in favour of the revisionist.
10.List this case in chamber on 29.09.2026 for compliance.
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