MURARILAL AHUJA AND SONS Vs. BOARD OF REVENUE

JUDGEMENT

(1.) THIS reference application has been filed by dealer-assessee for directing the Board of Revenue for Rajasthan at Ajmer ("the Board" herein) to refer the question of law arising out of its order dated 27th August, 1980, passed in case No. 2/77/revision/st/sriganganagar as it erroneously reject its application under section 15 (1) of the Rajasthan Sales Tax Act, 1954 (No. 29 of 1954) ("the Act"), by its order dated 24th May, 1981. It has been prayed by the dealer-assessee that the Board may be directed to refer the following questions of law which arise out of its order dated 27th August, 1980 : " 1. Whether, in the facts and circumstances of the case, the learned Members of the Revenue Board were not justified in maintaining the penalty levied under section 16 (1) (e) of the Act without applying their judicial mind whether there was mens rea and the petitioner was guilty of international evasion of the tax, especially when the assessment had taken place on the basis of the revised trading account and the return filed by the petitioner ? 2. Whether, in the facts and circumstances of the case, the learned Members of the Board committed an apparent error in maintaining the quantum of penalty without applying their judicial mind as to what penalty would meet the ends of justice looking to the background of the petitioner and further the fact that he had filed the revised trading account and the return before the assessment and the assessment had taken place on the basis of the revised return filed by the petitioner ? 3. Whether, in the facts and circumstances of the case, when the learned Members of the Revenue Board held that the penalty imposed by the Commercial Taxes Officer was illegal being more than the twice leviable under section 16 (1) (e) of the Act, it was not open to the non-petitioners Nos. 1 and 2 to modify that penalty so as to reduce it to the maximum leviable under section 16 (1) (e) of the Act and thus committed an error because non-petitioners Nos. 1 and 2 ought to have sent back the case to the Commercial Taxes Officer to levy proper penalty. In any case they ought to have applied their judicial mind to determine as to what penalty should have been levied to meet the ends of justice in the circumstances of the case ?"

(2.) THE Rajasthan Sales Tax (Amendment) Act, 1984 (No. 20 of 1984) (for short "the Amendment Act"), came into force from 1st May, 1985. According to section 13 (10) of the Amendment Act the application which was pending for a direction to the Board for making reference is to be treated as a revision and is to be disposed to under section 15 of the Act as substituted by the Amendment Act. A revision under section 15 of the Act lies only on questions of law.

(3.) ANWAR Ali's case [1970] 76 ITR 696 (SC) was followed in Anantharam Veerasinghaiah & Co. v. Commissioner of Income-tax, A. P. [1980] 123 ITR 457 (SC ). While considering the question of imposition of penalty, it was observed as under : " This is the provision as it stood at the relevant time. It is now settled law that an order imposing a penalty is the result of quasi-criminal proceedings and that the burden lies on the revenue to establish that the disputed amount represents income and that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars : Commissioner of Income-tax v. ANWAR Ali [1970] 76 ITR 696 (SC ). It is for the revenue to prove those ingredients before a penalty can be imposed. Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the revenue, to ascertain whether a particular amount is a revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding. That is how the law has been understood by this court in ANWAR Ali's case [1970] 76 ITR 696 (SC), and we believe that to be the law still. It was also laid down that before a penalty can be imposed the entirely of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has consciously concealed particulars of his income or deliberately furnished inaccurate particulars. "