The petitioner challenged penalty and tax demands raised under Section 74 after scrutiny proceedings under Section 61 were dropped. The factual background showed that the department had initially accepted the petitioner’s explanation and later initiated proceedings under Section 74 on the same material.
The Court held that such action violates statutory scheme and principles of fairness. Once scrutiny proceedings are dropped, further proceedings on identical grounds are unsustainable. The impugned order was quashed.