K.M.Dasan vs The Intelligence Officer on 26 May, 2003
11. It is settled law, that the assessment and penalty
proceedings are entirely different from each other and one
does not depend upon the outcome of the other; which can
exist independently. The observation made by the Division
Bench in 2009(3) ILR (Ker.) 653 (cited supra) is very
W.P(C) No. 12883 of 2008
: 10 :
much relevant, which is extracted below (as reproduced in
paragraph 7 of the counter affidavit)
"The first contention raised by counsel appearing for the
petitioner is that Tribunal's order pertaining to assessment
are binding on the Commissioner as well as lower
authorities while considering penalty and they have no
authority to come to any finding different from what the
Tribunal has held. Government Pleader on the other hand
contended that both assessment and penalty proceedings
are entirely different and the Tribunal's findings in
assessment are not binding on the departmental authorities
dealing with penalty case. He further pointed out that the
department has not accepted the finding of the Tribunal
and there was only an omission in filing Revision Petitions
before the High Court against orders of the Tribunal.
Counsel for the petitioner has relied on decision of the
Supreme Court in K.C. Builders Vs Assistant
Commissioner of Income Tax reported in 2004 (1) KLT
596 and contended that once assessment is cancelled,
subsequent orders on penalty and prosecution based on
such assessment also are not tenable. On the face of it the
argument of the counsel for the petitioner is correct
because if final fact finding authority like the Tribunal has
rendered finding on facts and the department has accepted
W.P(C) No. 12883 of 2008
: 11 :
the same, then they cannot take a different stand in
penalty proceedings pertaining to the same issue.
However, the question to be considered is whether the
failure of the department to file revision petitions against
the order of the Tribunal in assessment cases will bar the
statutory authority from levying penalty, if there are
sufficient materials justifying it. The Tribunal has no
jurisdiction in penalty matters and the final statutory
authority so far penalty under Section 45 A is considered,
is the Commissioner of Commercial Taxes, who is the
second revisional authority enjoying also suo moto revisional
power to correct order of the first revisional authority.
This Court has in large number of cases held that penalty
proceedings under Section 45A of the Act are independent
proceeding and the same can be proceeded with even
without waiting for completion of assessments. We are of
the view that the failure of the department to file revision
against order of the tribunal will not stand in the way of
statutory authorities considering penalty proceeding
independently and if there is sufficient material to sustain
the order, this Court has no authority to vacate such order
merely because Tribunal in parallel proceedings gave finding
which if challenged would not have been sustained by this
Court"