Penalty for undisclosed turnover may follow best judgment assessment and is not limited to proved concealment.

Penalty for undisclosed turnover under the Andhra Pradesh General Sales Tax Act was construed to operate consistently with best judgment assessment. The Court held that the expression is not confined to turnover actually proved to have been concealed, because the assessing authority is empowered to estimate turnover under best judgment and the penalty provision must follow that final estimation. Relying on the analogous income-tax penalty principle, the Court treated the penalty as referable to turnover as finally estimated rather than only to specifically established suppression, and the revision was decided against the assessee.

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Issues: Whether, for the purpose of penalty under section 14(2) of the Andhra Pradesh General Sales Tax Act, the expression relating to undisclosed turnover refers only to turnover actually proved to have been concealed or extends to the turnover finally estimated in a best judgment assessment.

Analysis: The provision was construed in the setting of best judgment assessment under section 14(1), where the assessing authority is empowered to estimate turnover. The Court held that the penalty provision should be read consistently with that power of estimation and that it would be unreasonable to confine penalty only to turnover specifically shown to have been concealed. Reference was made to the analogous penalty provision in section 28(1)(c) of the Indian Income-tax Act, 1922, where penalty is linked to the tax assessed on income as finally estimated and not merely to income proved to have been concealed.

Conclusion: The penalty under section 14(2) is not restricted to turnover actually proved to have been suppressed and may be levied with reference to the turnover as finally estimated. The revision was therefore decided against the assessee.

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