Holding

The penalty under Section 271(1)(c) is a civil, strict‑liability provision that does not require mens rea and may be imposed only when the statutory conditions of concealment or furnishing inaccurate particulars are satisfied; the High Court’s reliance on Dilip N. Shroff is erroneous and must be reconsidered in light of Dharamendra Textile and Rajasthan Spinning.

Summary

The assessee, Atul Mohan Bindal, filed his income tax return for AY 2002-03 and later the Assessing Officer added salary earned in Singapore, a retrenchment compensation, and interest income, imposing a penalty under Section 271(1)(c) of the Income Tax Act. The assessee contended that the additions were made on his own disclosure and that there was no concealment or inaccurate furnishing of particulars, seeking relief from the penalty. The CIT (Appeals) and the Income Tax Appellate Tribunal set aside the penalty, holding the omissions were inadvertent and not punishable under Section 271(1)(c). The Delhi High Court upheld this view, relying on the earlier decision in Dilip N. Shroff, which the Revenue challenged. The Supreme Court held that the penalty under Section 271(1)(c) is a civil, strict‑liability provision that does not require mens rea, and can be imposed only when the statutory conditions of concealment or inaccurate particulars are satisfied; it also ruled that the High Court’s reliance on Dilip N. Shroff was misplaced in view of the later decisions in Dharamendra Textile and Rajasthan Spinning. Consequently, the appeal was allowed, the High Court’s judgment was set aside, and the matter was remitted for fresh consideration.

Issues considered

Whether a penalty under Section 271(1)(c) can be levied when the omission is unintentional and there is no concealment or furnishing of inaccurate particulars.
Whether Section 271(1)(c) imposes a civil, strict‑liability penalty that does not require mens rea.
Whether the High Court’s reliance on Dilip N. Shroff is valid in light of the decisions in Dharamendra Textile and Rajasthan Spinning & Weaving Mills.
Whether the Assessing Officer had a valid satisfaction to initiate penalty proceedings under Section 271(1)(c).

Legislation cited

Income Tax Act, 1961s. 10(108), s. 143, s. 260A, s. 271(1)(c), s. 276(c)

Subjects

Income TaxPenaltySection 271(1)(c)Civil liabilityStrict liabilityConcealment of incomeMens reaTax assessment

Judgment

[2009] 13 (ADDL.) S.C.R. 464

A G.l.T., DELHI .......
v.
ATUL MOHAN BINDAL
(Civil Appeal No. 5769 of 2009)

AUGUST 24, 2009
B
[TARUN CHATTERJEE AND R.M. LODHA, JJ.]
,,
Income Tax Act, 1961 - s.271(1)(c) - Applicability of - -\
Concealed income - Penalty in terms of s.271(1)(c) - Held:
c Is neither criminal nor quasi criminal but a civil liability; albeit
a strict liability - Such liability being civil in nature, mens rea
is not essential.

The assessee-respondent filed return of his income. c
The Assessing Officer added various amounts to the
D
income declared .by assessee in the return viz. salary ~
income earned by assessee in Singapore, amount
received by him from erstwhile employer and interest
income earned by him from bank, and imposed penalty
u/s.271(1)(c) of the Income Tax Act, 1961.
E
The assessee accepted the order of assessment but
challenged the order of penalty. The CIT (Appeals)
allowed the appeal holding that it was a case of ... v

unintentional and inadvertent omission and therefore, it ~

F was not a fit case for levy of penalty uls.271(1)(c) as the
.assessee had not concealed the particulars of his income
nor did he furnish any inaccurate particulars thereof. The
Tribunal upheld the order passed by CIT (Appeals). The
High Court upheld the view of the Tribunal and CIT
G (Appeals). Hence the present appeal by the Revenue.
Allowing the appeal and remitting the matter to High . -j.
'
Court for fresh consideration, the Court

H 464
C.l.T., DELHI v. ATUL MOHAN BINDAL 465

~-1 HELD: 1.1. A close look at Section 271(1) (c) and A
Explanation (1) appended thereto would show that in the
course of any proceedings under the Income Tax Act,
..
1961 inter alia, if the Assessing Officer is satisfied that a
person has concealed the particulars of his income or
furnished inaccurate particulars of such income, such B
person may be directed to pay penalty. The quantum of
penalty as prescribed in Clause (iii) Explanation 1,
~
J- appended to section 271(1) provides that if that person
fails to offer an explanation or the explanation offered by
such person is found to be false or the explanation c
offered by him is not substantiated and he fails to .prove
that such explanation is bona fide and that all the facts
relating the same and material to the computation of his
total income has been disclosed by him, for the purposes
of Section 271(1)(c), the amount added or disallowed in D
~ computing the total income is deemed t~ represent the
concealed income. The penalty spoken of in Section
271(1)(c) is neither criminal nor quasi criminal but a civil
liability; albeit a strict liability. Such liability being civil in
nature, mens rea is not essential. For applicability of
E
Section 271(1)(c), conditions stated therein must exist.
- [Paras 11 and 14] (472-G-H; 473-A-D; 477-F]

-- ,, 1.2. In the present case, the High Court relied upon
its earlier decision which is said to have been approved
by this Court in Dililp N. Shroff. However, Di/lip N. Shroff F
has been held to be not laying down good law in
Dharamendra Textiles. Dharamendra Textiles is explained
by this Court in Rajasthan Spining and Weaving Mills. The
matter needs to be reconsidered by the High Court in the
light of the decisions of this Court in Dharamendra G
Textiles and Rajasthan Spinning and Weaving Mills. [Para
> ~ .
15] [477-G-H]
....-·
Dilip N. Shroff v. Joint Commissioner of Income Tax
(2007) 291 ITR 519; T. Ashok Pai v. Commissioner of
H
,..'
466 SUPREME COURT REPORTS [2009) 13 (ADDL.) S.C.R.

A Income Tax (2007) 292 ITR 11(SC); Union of .India and Ors. ~
v. Dharamendra Textile Processors and Ors. (2008) 306 ITR
277 and Union of India v. Mis Rajasthan Spinning & Weaving
Mills (2009) 8 SCALE 231, referred to.
Case Law Reference:
B
(2007) 291 ITR 519 referred to Para 9
(2007) 29~ IJ"R 11 (SC) referred to Para 9
(2008) 306 ITR 277 referred to Para 12
c
(2009) 8 SCALE 231 referred to Para 13
CIVIL APPELLATE JURISDICTION : Civil Appeal No 5769
of 2009.

D From the Judgment & Order dated 25.01.2008 of the High
Court of Delhi at New Delhi in l.T.A. No. 1336 of 2007. ~

P.P. Malhotra, ASG, Naresh Kaushik, Tufail A Khan, B.V.
Balaram for the Appellant.

E The Judgment of the Court was delivered by

R.M. LODHA, J. 1. Delay condoned.

2. Leave granted.

F 3. The revenue has come up in appeal by special leave
aggrieved by the judgement of the High Court of Delhi whereby
the High Court dismissed their appeal under Section 260A of
the Income Tax act, 1961 (for short, "the Acr) on January 25,
2008 and· upheld the order dated December 22, 2006 passed
G by the Income Tax Appellate Tribunal, Delhi Bench 'H', New
Delhi.

4. Atul Mohan Bindal - assessee filed return of his income
for Assessment Year 2002-03 on August 8, 2002 declaring his
H total income Rs.1,98,50,021/-. In the assessment proceedings
C.l.T., DELHI v. ATUL MOHAN BINDAL 467
[R.M. LODHA, J.]

~
u/s 143, a notice alongwith questionnaire was issued to him A
by the Assessing Officer on November 29, 2002. Pursuant
thereto, assessee attended the assessment proceedings and
furnished the requisite details. During the assessment
proceedings, it transpired that assessee worked with M/s OHL
International($) PTE Ltd., Singapore during the previous year B
and was paid salary in Singapore amounting to US$ 36,680.79
equivalent to Rs.17,81,952/-. The assessee explained that an
amount of US $ 8199.87 (Rs.3,98,350/-) was deducted as tax
"' ;J._
from the aforesaid salary income and having paid tax on salary
income earned in Singapore, he was of the view that the said c
income was not liable to be included in the total income in India.
He however, offered salary income of Rs. 17,81,952/- to be
included in his total income. The assessee was also found to
have received an amount of Rs. 5,00,000/- from his erstwhile
employer Mis Honeywell International (India) Pvt. Ltd. in the D
;). previous year. His explanation was .that the said amount was
exempted under Section 10(1OB) of the Act being retrenchment
compensation. According to the Assessing Officer, that amount
could not be exempted u/s 10 (108) as the assessee was not
a workman. The assessee also earned interest income of Rs.
E
22,8~2/- from Bank of India which was not included by h~m in
the total income but he offered for tax the said amount. The
Assessing Officer, accordingly, added Rs.17,81,952/-,
" '1· Rs.5,00,000/- and Rs.22,812/- to the income declared by the
assessee in the return and assessed the total income of
assessee at Rs.2,21,54,785/-. Penalty proceedings under F
Section 271(1)(c) were initiated separately and penalty of
Rs.7,75,211/- was imposed under Section 271(1)(c) by the
Assessing Officer vide Order dated March 16, 2003.

5. The assessee accepted .the order of assessment but G
-4
challenged the order of penalty in appeal before the CIT
/ ..... (Appeals) XXV, New Delhi.

6. After hearing the assessee and the departmental
representative, the CIT (Appeals) XXV, New Delhi allowed the
H
468 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A appeal and set aside the order of penalty vide his order dated r-
August 22, 2005..The CIT (appeals) held that the assessee has
neither concealed the particulars of his income nor he furnished
any inaccurate particulars thereof. This is what the CIT
(Appeals) held:
B
"... I believe that this is a case of unintentional and
inadvertent omission and therefore, it is not a fit case for
levy of penalty u/s. 271(1)(c) of the Act as the assessee ~
,
has not concealed the particulars of his income; nor has
he furnished any inaccurate particulars thereof. As can be
c seen from a perusal of the impugned order, the penalty has
been levied with reference to firstly, the addition
disallowing the claim of Retrenchment compensation of
Rs.5,00,000/- made u/s 10(108) of the Act, secondly, the
salary received in Singapore for services rendered outside
D India from December to March 2002 amounting to Rs. ~
17,81,952/- offered by the appellant in the co·urse of
assessment proceedings and thirdly the interest income
of Rs. 22,812/- also offered for tax in the revised return filed
during the course of assessment proceedings. As regards
E the former, the AO appears to be completely satisfied as
regard the genuineness of the reasons that necessitated
the revision. As regard the second, the issue involved
~
difference of opinion even between two different benches
of the Apex Court, and thirdly, the A.O. again seems to be r
F satisfied about the appellant's reply in this connection. In
any case, the additions were made on the basis of the
particulars furnished by the appellant and not discovered
independently by the A.O.

5.1. That the appellant had a bona fide belief of the non-
G
taxability of the salary income earned in Singapore where
tax- withholding had taken place and India had OTAA with . ~ "
Singapore, so he did not include this receipt in his salary
income cannot be rejected out of hand. During assessment
proceedings however, assessee offered this salary receipt
H
...
CJ.T., DELHI v. ATUL MOHAN BINDAL 469
[R.M. LODHA, J.]

for taxation as per IT Act, 1961. Therefore, an amount of A
Rs. 17,81,952/- was included in the tot~d income of the
assessee. In such setting of facts, I am afraid, the
-.. impugned addition may not lead to concealment of income
or furnishing of inaccurate particulars thereof."
B
7. The Revenue challenged the order of CIT (Appeals)
before the Income Tax Appellate Tribunal, Delhi (for short, "the
J Tribunal").
""
8. The Tribunsl heard the departmental representative and
the authorized representative of the assessee and by its order c
dated December 22, 2006 upheld the order of CIT {Appeals).
The Tribunal considered the matter thus:

) " 12. On a careful consideration of the rival submissions,
we are of the view that the CIT (Appeals) was justified in D
~ canceling the penalty in respect of all the three items. So
far as the salary received in Singapore from OHL is
concerned, it is true that since the assessee was a
resident of India, the salary received in Singapore should
be taxed in his hands. The claim of the assessee was that
E
he was under a bona fide though mistaken impression that
because of the existence of the OTAA between India and
II>
Singapore, if taxes are deducted from salary income in
'f Singapore than the said income cannot be taxed by the
Indian Income tax authorities. Though, considering the
position occupied by the assessee ( as vice-presidenU
F
general manager of a multinational company drawing a
huge salary) it is expected that he would have been
advised by a professional with regard to his taxation
matters and therefore, it somewhat difficult to accept the
explanation, more particularly when the assessee knew of G
the existence of a double taxation avoidance agreement ·
...• 4· between India and Singapore, still one can perhaps extend
the benefits of doubt to him because the moment he was
informed by the Assessing Officer that is not the correct
H
470 SUPREME COURT REPORTS [2009) 13 (ADDL.) S.C.R.

A legal position, the assessee included the salary in the total )t--
income. Further, there is no dispute that the assessee was
eligible to get credit for the taxes paid in Singapore. In fact,
the Assessing Officer has acknowledge the same in the
assessment order itself. As regards the claim for
B exemption of the retrenchment compensation received by
the assessee, the CIT Appeals) is right in saying that the
claim was on account of the opinion bona fide and honestly
'(
entertained by the assessee that he is a workman and, -"'
therefore, the exemption is available. The assessee's
c claim that he is a workman was disputed by the Assessing
Officer and he referred to the definition of the workman as
per the Industrial Dispute act, 1947 to reject the
assessee's claim. Here also, it is a case of a difference
of opinion as regards the interpretation of the work {_
'workman' for which no penalty is imposable. At best, it can
D
only be said that the assessee did not ta~e pains to study ~
the Industrial Disputes act and to find out how the work
'workman' is defined therein. Lastly, with regard to the
claim of interest banks, since the bank certificates were
initially not available to the assessee, it was not included
E in the return. The omission thus seems to be due to
reasons beyond the assessee's control. Moverover, in
respect of all the three items, the CIT (Appeals) has
recorded a finding in paragraph 6 of his order that all the •
1
facts were disclosed by the assessee in the annexure to
F the return and the information leading to the additions was
taken by the Assessing Officer only from the return filed
by the assessee and that such information was not found
to be false. Thus, there has been no failure on the part of
the assessee to declare all the facts before the Assessing
G Officer. We are, therefore, in agreement with the view
taken by the CIT (Appeals) that this is not a case where
the assessee can be said to have concealed his income
. ~· ...
or furnished inaccurate particulars even within the meaning
of Explanation 1 to Section 271(1)(c)."
H .'
~
C.l~T., DELHI v. ATUL MOHAN BINDAL 471
[R.M. LODHA, J.]
9. The revenue filed appeal u/s 260A before the High A
-1
Court of Delhi. The High Court considered the question whether
the Assessing Officer had recorded a valid satisfaction for
initiating penalty proceedings under Section 271(1)(c) of the
Act. Inter ~lia, relying upon a decision of that Court in
"" Commissioner of Income Tax vs. Ram Commercial B
Enterprises Ltd. and noticing that Ram Commercial
Enterprises has been approved by this Court in Dilip N. Shroff
~
J-- vs. Joint Commissioner of Income Tax1, and T. Ashok Pai vs.
Commissioner of Income Tax2 , held that from the reading of
the assessment order, it was not discernible as to why the c
Assessing Officer chose to initiate proceedings against the
assessee and under which part of Section 271 (1 )(c). The High
Court, therefore, accepted the view of the Tribunal and CIT
(Appeals) and dismissed the appeal of the Revenue with cost
~
of Rs. 5,000/-.
D
-J
10. Section 271(1)(c) as was operative during the relevant
year reads thus:
"271. (1) If the Assessing Officer or the
(***) (Commissioner (Appeals) in the course of a n y E
proceedings under this Act , is satisfied that any person.

(a) ..............
• 't
(b) ..............
F
(c) has concealed the particulars of his income or (***)
furnished inaccurate particulars of such income,

he may direct that such person shall pay by way of penalty,

(i) ............. G
, ~· (ii) ............

1. (2007) 291 ITR 519 (SC).
2. (2007) 292 ITR 11 (SC). H
'
472 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A (iii) in the cases referr~d to in clause (c), in addition to ~-
any tax payable by him, a sum which shall not be
less than,, but which shall not exceed (three times),
the amount of tax sought to be evaded by reason .·
of the concealment of particulars of his income or ...
B the furnishing of inaccurate particulars of such
income.

(***)
~
(Explanation 1. Where in respect of any facts
c material to the computation of the total income of
any person under this Act.

(A) such person fails to offer an explanation or
offers an explanation which is found by the
D Assessing Officer or the(**) (Commissioner
(Appeals) to be faJse, or ~

(B) such person offers an explanation which he
is not able to substantiate ( and fails to prove
that such explanation is bona fide and that all
E the facts relating to the same and material to
the computation of his total income have
been disclosed by him),
•
then, the amount added or disallowed in -¥
F computing the total income of such person as
a result thereof shall, for the purposes of
clause (c) of this sub-section, be deemed to
represent the income in respect of which
particulars have been concealed.
G ............................................n
. ~ ~
11. A close look at Section 271(1) (c} and Explanation (1)
appended thereto would show that in the course of any
proceedings under the Act, inter alia, if the Assessing Officer
H
C.l.T., DELHI v. ATUL MOHAN BINDAL 473
[R.M. LODHA, J.]
is satisfied that a person has concealed the particulars of his A
-1
income or furnished inaccurate particulars of such income, such
person may be directed to pay penalty. The quantum of penalty
is prescribed in Clause (iii). Explanation 1, appendet:J to section
271 (1) provides that if that person fails to offer an explanation
or the explanation offered by such person is found to be false 8
or the explanation offered by him is not substantiated and he
fails to p·rove that such explanation is bona fide and that all the
~ facts relating the same and material to the computation of his
"' total income has been disclosed by him, for the purposes of
Section 271 (1 )(c), the amount added or disallowed in c
computing the total income is deemed to represent the
concealed income. The penalty spoken of in Section 271(1)(c)
is neither criminal nor quasi criminal but a civil liability; albeit a
strict liability. Such liability being civil in nature, mens rea is not
essential. D
~ -I
12. In the case of Union of India and Ors. vs.
Dharamendra Textile Processors and Ors 3, a three judge
Bench of this Court held that Dilip N. Shroff did not lay down
correct law as the difference between Section 271(1)(c) and
Section 276(c) of the Act was lost sight of. The Court held that E

.. ..
the explanation appended to Section 271 (1 )(c) indicates
element of strict liability on the assessee for concealment or
for giving inaccurate particulars while filing the return. The Court
held thus:
F
"The Explanations appended to Section 271(1)(c) of the
Income Tax Act, 1961, indicate the elements of strict liability
on the assessee for concealment or for giving inaccurate
particulars while filing the return. The judgment in Dilip N.
Shroff case (supra) has not considered the effect and
G
relevance of Section 276 (c) of the l.T. Act. The object
'
~ ·-1 . behind the enactment of Section 271 (1 )(c) read with
Explanations indicates that the Section has been enacted
to provide for a remedy for loss of revenue. The penalty
3. (2008) 306 ITR 277. H
474 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

r
A under that provision is a civil liability. Willful concealment '
~--
is not an essential ingredient for attracting civil liability as
is the case in the matter of prosecution under Section 276
(c)."

13. The decision of this Court in Dharamendra Textile
B
Processors has been explained recently by this Court in the
case of Union of India vs. Mis Rajasthan Spinning & Weaving
Mills4 thus: ~
y

"20. At this stage, we need to examine the recent decision
c of this court in Dharmendra Textile(supra). In almost every
case relating to penalty, the decision is referred. to on behalf
>
of the Revenue as if it laid down that in every case of non-
payment or short payment of duty the penalty clause would
..
, ....
'- automatically get attracted and the authority had no
D discretion in the matter. One of us (Aftab Alam, J.) was a ,,
~
party to the decision in Dharamendra Textiles and we see '-

no reason to understand or read that decision in that
manner. In Dharmendra Textile the Court framed the five
issues before it, in paragraph 2 of the decision as follows:
E
"2. A Division Bench of this Court has referred the
controversy involved in these appeals to a larger Bench
doubting the correctness of the view expressed in Dilip N. ... .
Shroff vs. Joint Commissioner of Income Tax, Mumbai i
and Another [(2007) 8 SCALE 304]. The question which
F arises for determination in all these appeals is whether
. Section 11 AC of the Central Excise Act, 1944 (in short the
'Act') inserted by Finance Act 1996 with the intention of
imposing mandatory penalty on persons who evaded
payment of tax should be read to contain mens rea as an ..
I

G essential ingredient and whether there is a scope for
levying penalty below the prescribed minimum. Before the -~ ~

Division Bench, stand of the revenue was that said section
should be read as penalty for statutory offence and the .

H 4. (2009) 8 SCALE 231.
C.l.T., DELHI v. ATUL MOHAN BINDAL 475
[R.M. LODHA, J.)
authority imposing penalty has no discretion in the matter A
of imposition of penalty and the adjudicating authority in
such cases was duty bound to impose penalty equal to the
duties so determined. The assess ori the other hand
referred to Section 271(1)(c) of the Income Tax Act, 1961
(in short the 'IT Act') taking the stand that Section 11AC B
of the Act is identically worded and in a given case it was
.,. ... open to the assessing officer not to impose any penalty .
The Division Bench made reference to Rule 96ZQ and Rule
96ZO of the Central Excise Rules, 1944 (in short the
'Rules') and a decision of this court in Chairman, SEBI vs. c
Shriram Mutual Fund & Anr. {2006 (5) SCC 361) and was
of the view that the basic scheme for imposition of penalty
under section 271 (1)(c) of IT Act, Section 11 AC of the Act
""' and Rule 96ZQ(5) of the Rules is common. According to
-; the Division Bench the correct position in law was laid
D
down in Chairman, SEBl's case (supra) and not. in Dilip
Shroffs case (supra). Therefore, the matter was referred
to a larger Bench"

After referring to a number of decisions on interpretation
and construction of statutory interpretation and construction E
of statutory provisions, in paragraphs 26 and 27 of the
decision, the court observed and held as follows:
~

. "26. In Union Budget of 1996-97, Section 11AC of
the Act was introduced. It has made the position clear that F
there is no scope for any discretion. In para 136 of the
Union Budget reference has been made to the provision
stating that the levy of penalty is a mandatory penalty. In
the Notes on Clauses als·o the similar indication has been
given.
G
) ~.
"27. Above being the position, the plea that the Rules
96ZQ and 96ZO have a concept of discretion inbuilt cannot
be sustained. Dilip Shroffs case (supra) was not correctly
decided but Chairman, SEBl's case (supra) has analysed
H
476 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A the legal position in the correct perspectives. The reference
is answered ...... n

21. From the above, we fail to see how the decision in
Dharamendra Textile can be said to hold that
Section 11 C would apply to every case of non-
B
payment or short payment of duty regardless of the
conditions expressly mentioned in the section for its
application.

22. There is another very strong reason for holding that
c Dharamendra Textile could not have interpreted
Section 11AC in the manner as suggested
because in that case that was not even the stand
of the revenue. In paragraph 5 of the decision the
court noted the submission made on behalf of the
D revenue as follows:

"5. Mr. Chandrashekharan, Additional Solicitor
General submitted that in Rules 96ZQ and 96ZO
there is no reference to any mens rea as in Section
11 AC where mens rea is prescribed statutorily.
E
This is clear from the extended. period of limitation
permissible under section 11 A of the Act. It is in
essence submitted that the penalty is for statutory •
offence. It is pointed out that the proviso to Section ~
11A deals with the time for initiation of action.
F Section 11AC is only a mechanism for
. computation and the quantum of penalty. It is stated
·that the consequences of fraud etc. relate to the
extended period of limitation and the onus is on the
revenue to establish that the extended period of
G limitation is applicable. Once that hurdle is crossed
by the revenue, the assessee is exposed to penalty · ~ ~ ·
and the quantum of penalty is fixed. It is pointed out
that even if in some statues mens rea is specifically
provided for, so is the limit or imposition of penalty,
H
C.l.T., DELHI v. ATUL MOHAN BINDAL 477
[R.M. LODHA, J.]
that is the maximum fixed or ;the quantum has to A
4 be between two limits fixed. In the cases at hand,
there is no variable and, therefore, no discretion. It
is pointed out that prior to insertion of Section
11AC, Rule 173Q was in vogue in which no mens
rea was provided for. It only stated "which he knows B
or has reason to believe". The said clause referred
to willful action. According to learned counsel which
... ~
was inferentially provided in some respects in Rule
173Q, now stands explicitly provided in Section
11AC. Where the outer limit of penalty is fixed and c
the statute provides that it should not exceed a
particular limit, that itself indicates scope for
discretion but that is not the case here. n

' 23. The decision in Dharamendra Textile must,
therefore, be understood to mean that though the D
-J application of section 11 AC would depend upon
the existence or otherwise of; the conditions
expressly stated in the section, once the section is
applicable in a case the concerned authority would
have no discretion in quantifying the amount and E
penalty must be imposed equal to the duty
determined under sub-section (2) of Section 11A.
That is what Dharamendra Textile decides."
' }
14. I~ goes without saying that for applicability of Section F
271(1)(c), conditions stated therein must exist.

15. Insofar as the present case is concerned, as noticed
above, the High Court relied upon its earlier decision in Ram
Commercial Enterprises which is said to have been approved
by this Court in Dililp N. Shroff. However, Di/lip N. Shroff has G
been held to be not laying down good law in Dharamendra
~·
~-
Textiles. Dharamendra Textiles is explained by this Court in
Rajasthan Spining and Weaving Mills. Having thoughtfully
considered the matter, in our judgment, the matter needs to be
reconsidered by the High Court in the light of the decisions of H
478 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.

A this Court in Dharamendra Textiles and Rajasthan Spinning
and Weaving Mills. t-,...
16. In the result, appeal is allowed and the judgment of the
High Court of Delhi passed on January 25, 2008 is set aside.
The matter is remitted back to the High Court for fresh
8
consideration and decision as indicated above. Since the
assessee has not chosen to appear, no order as to costs.

B.B.B. Appeal allowed.