Case Law Details
A bare reading of the sub-section (5) of Section 22 would show that it is only after an assessment is complete under sub-section (4) of Section 22, that penalty can be imposed by the Assessing Officer. However, it can, either be imposed at the time when, the assessment order is passed, or, by way of a separate order, albeit, after the assessment order is passed. Therefore, the proposal in the show cause notice to levy penalty at the rate of 150% prior to adjudication demonstrates premeditation.
Furthermore, as has been correctly argued by the learned counsel for the petitioner, as per the provisions of Clause (iii) of the explanation to Section 22(5), the petitioner is entitled to seek deduction from the tax assessed under sub-section (4) of Section 22 of tax paid on any such turnover on which, tax is paid at a concessional rate, if requisite declarations are furnished, before levy of penalty.
Having regard to the aforesaid provisions, I am of the view that the impugned show cause notice being both premeditated and/or premature, is required to be set aside.
Extract of High Court Order
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