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9. We would like to humbly submit before your honor the findings of the Learned Assessing Officer while imposing the penalty along with our comments thereto.-

9.1 The Learned Assessing Officer has distinguished the decision of Honorable Apex Court in the case of Dharmendra textile processors 306 ITR 277 and observed as under:

"The Apex Court held that object behind enactment of section 271(1)(c), read with the Explanation thereto, indicates that the said section has been enacted to provide for a remedy for loss for "loss of revenue. The penalty under that provision is a civil liability." (extract from the order levying penalty emphasis supplied) 9.1.1 In this regard we would like to humbly bring forth before your honor the decision of the Honorable SC in the case of Rajasthan Spinning and Weaving Mills reported in 180 Taxmann 609 which has been pronounced after the decision in the case of Dharmendra textile processors has been delivered. The Honorable Apex Court has very clearly laid down that willful concealment or fraud is an essential condition for levy of penalty. The Honorable SC observed that the revenue has not understood the implication of Dharrnendra textile processors's case in the right manner. It has been held that mens rea is an essential condition for levy of penalty. In para 20 in the decision of the Rajasthan Spinning and Weaving Mills the honorable Apex court has clearly laid down the correct law in regard to imposition of penalty.

9.1.2 In this regard it is humbly submitted that the Learned Assessing Officer While admitting that penalty U/s. 271(1)(c) has been enacted to provide for a remedy for loss of revenue has merely stated that this case law is in favor of the department. The applicability of the decision to the case of the appellant has not been narrated in detail and has instead levied 300% of the tax amount as penalty. It is humbly submitted before your honor that the Learned Assessing Officer has not applied her mind as to the quantum of loss of revenue. On the face of the order it appears that the Learned Assessing Officer has mechanically levied" the penalty. The Learned Assessing Officer has not considered the decision of Honorable SC in the Rajasthan Spinning and Weaving Mills while holding that the decision Dharmendra textile processors is in favor of the department.