The Revenue’s submission that prima facie satisfaction of the AO need not be reflected at the stage of initiation is not acceptable. The presence of prima facie satisfaction for initiation of penalty proceedings was and remains a jurisdictional fact which cannot be wished away even post amendment. If an interpretation such as the one proposed by the Revenue is accepted then s. 271 (1B) will fall foul of Article 14 of the Constitution as it will then be impregnated with the vice of arbitrariness. The AO would then be in a position to pick a case for initiation of penalty merely because there is an addition or disallowance without arriving at a prima facie satisfaction with respect to infraction of s. 271 (1)(c).

The effect of Vinod Solanki vs. UOI (233) ELT 157 (S.C.) is that in criminal or quasi criminal proceedings, a person accused of commission of offence under FERA has not to prove to the hilt that confession has been obtained from him by inducement or threat by the person in authority. However, when confession had been retracted, the Court must bear in mind the attending circumstances and other relevant factors to come to conclusion whether the confession was voluntary and was not obtained by any inducement, threat or force. At the same time, mere retraction of the confession may not be sufficient to make confessional statement irrelevant for the purpose of quasi criminal proceedings and the Court is obligated to take into consideration the pros and cons of confession and retraction made by the accused.

Sale & Lease back transactions are not a “sham” The assessee, a State Electricity Board, sold energy saving devices on which 100% depreciation was permitted and took the same assets on lease and claimed a deduction for the lease rent. …

CIT vs. Punjab State Electricity Board (Punjab & Haryana High Court) Read More »

A Co-op housing society is a mutual association and even transfer fees received from transferee members is exempt on the ground of mutuality because the fee can be appropriated only if the transferee is admitted to membership. If the transferee is not admitted, the moneys will have to be refunded. However, if an amount is received more than what is chargeable under the Bye-laws or Government directions, the society is bound to repay the same and if it retains the same it will be in the nature of profit-making and that amount will be chargeable to tax.

The judgment in Dharmendra Textile cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability u/s 276C and penalty u/s 271(1) ( c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, the concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. In view of the finding that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, penalty was not leviable.

Once the Apex Court in Hongo India 236 E.L.T. 417 has held that the High Court has no power to condone delay in filing Appeal under s. 35 G of the Excise Act, we have no option but to hold that this Court has no power to condone delay under s. 260 A because s. 260 A is pari materia with s. 35 G of the Excise Act. As the appeals were delayed, they had to be dismissed