Rajasthan High Court in a very important case namely ACTO vs Jain Hardware Stores has held that no penalty can be levied in the provisional assessment as for leving penalty definite  findings and  conclusions and many things have to be proved, therefore penalty cannot be levied merely on the basis of provisional assessment.

The High Court while dismissing the revision petition of the State held as under:

“After going through the orders impugned, I am of the opinion, that the Tax Board as well as the DC (A) have rightly deleted the penalty imposed by the AO taking into consideration the fact that merely on the basis of provisional assessment, penalty is not leviable. There is no basis for such imposition after all for imposition of penalty Assessing Officer has to come to a definite finding and conclusion and many things have to be proved, imposition of penalty is a serious matter and cannot be imposed in a casual or summary manner like in the present case therefor, on the basis of provisional assessment, an estimation penalty cannot be levied and it has rightly been deleted. I do not find any illegality, irregularity and perversity, in the orders passed by the Tax Board as well as by the DC(A), as such, no interference is called for by this Court as no question of law is involved.”

Full judgement is as under:

HIGH COURT OF JUDICATURE FOR RAJASTHAN’ JAIPUR.

 SB Sales Tax Revision Petition No.101/2011

Assistant Commercial Taxes Officer, Ward-I, Ajmer.

vs.

M/s. Jain Hardware and Mill Stores, Ajmer.

Date of Decision – 25th July, 2013

HON’BLE MR. JUSTICE J. K. RANKA Mr. RB Mathur, for the petitioner.

1. By this petition, the petitioner has assailed the order passed by the Rajasthan Tax Board, Ajmer (In short ‘The Tax Board’) dated 11.3.2003 in Appeal No.490/2001, whereby it rejected the appeal filed by the petitioner-department by upholding the order passed by the learned Deputy Commissioner (Appeals), Commercial Taxes Department, Ajmer ( in short ‘The DC(A), dated 7.12.2000 and quashed and set-aside the order of penalty passed by the learned Assessing Officer (In short ‘The A.O.’) amounting to Rs. 24921/- under Section 77(8) of the Act.

2. It is noticed that the A.O. imposed the penalty only on the basis of provisional assessment and the DC(A) in appeal came to the conclusion that no penalty could be imposed where provisional assessment has been made and accordingly, deleted the penalty as even otherwise, there is no basis for the same. The order passed by the DC(A) was challenged before the Tax Board, by the petitioner-department. The Tax Board also came to the same conclusion by upholding the order passed by the DC(A) and held that merely on provisional basis or on account of estimation no penalty could be imposed.

3.  Hence, this revision petition.

4. Mr. RB Mathur, learned counsel for the petitioner-department submits that both the lower Appellate Authorities have committed gross error in reversing the findings given by the AO who had rightly arrived at a conclusion that on provisional assessment, penalty is leviable.

5. I have considered the arguments advanced by the learned counsel for the petitioner and perused the impugned orders passed by the Tax Board and the DC(A). After going through the orders impugned, I am of the opinion, that the Tax Board as well as the DC (A) have rightly deleted the penalty imposed by the AO taking into consideration the fact that merely on the basis of provisional assessment, penalty is not leviable. There is no basis for such imposition after all for imposition of penalty Assessing Officer has to come to a definite finding and conclusion and many things have to be proved, imposition of penalty is a serious matter and cannot be imposed in a casual or summary manner like in the present case therefor, on the basis of provisional assessment, oar estimation penalty cannot be levied and it has rightly been deleted. I do not find any illegality, irregularity and perversity, in the orders passed by the Tax Board as well as by the DC(A), as such, no interference is called for by this Court as no question of law is involved.

6. Consequently, the Sales Tax Revision Petition is dismissed.

(J. K. Ranka), J.

—————-

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(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: amit@amitbajajadvocate.com, M +919815243335)

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0 responses to “Penalty cannot be levied merely based on provisional assessment”

  1. AKASH VAJPAI says:

    For any tax related query,mail me @ akashvajpai24@gmail.com. Answer will be given in 24 hours.

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