Supplementary return does not cure wilful omission in monthly returns; penalty and suppressed turnover additions upheld.

An assessee who elected assessment on monthly returns remained bound to file correct returns for that period, and a later supplementary return did not cure a wilful omission in the original returns or remove the foundation for penalty. The court upheld penalty under section 12(3), holding that the omission to disclose turnover found in the pocket note-books constituted deliberate default. It also sustained the addition for suppressed turnover for the anterior period, finding that entries in the note-books, surrounding circumstances, and indications in the regular accounts provided adequate basis to infer earlier suppression and estimate the quantum.

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Issues: (i) Whether the filing of a supplementary return before final assessment negatived the assessee's liability to penalty for having filed incorrect monthly returns after opting for assessment under rule 18; (ii) whether the addition made towards suppressed turnover for the anterior period was justified.

Issue (i): Whether the filing of a supplementary return before final assessment negatived the assessee's liability to penalty for having filed incorrect monthly returns after opting for assessment under rule 18.

Analysis: Once the assessee elected to be assessed on monthly returns, he was bound to furnish correct returns for the turnover covered by that election. The omission to disclose the turnover found in the anamath pocket note-books was treated as a wilful omission in the monthly returns. The later supplementary return could assist in bringing the turnover into the final assessment, but it did not condone the earlier deliberate default or wipe out the basis for penalty.

Conclusion: The levy of penalty under section 12(3) was held to be lawful and within the competence of the assessing authority.

Issue (ii): Whether the addition made towards suppressed turnover for the anterior period was justified.

Analysis: The authorities relied on the entries in the pocket note-books, the surrounding circumstances, and the indications of suppression in the regular accounts to infer that similar suppressed transactions existed even before the period covered by the discovered notebooks. The reasoning adopted for estimating suppression for the earlier period was held to be supported by adequate grounds, and no infirmity was found in the quantum estimated.

Conclusion: The estimate of suppressed turnover for the anterior period was upheld.

Final Conclusion: The revision failed in its entirety, and the orders sustaining the penalty and the turnover additions were left undisturbed.

Ratio Decidendi: A supplementary return filed before final assessment does not erase a wilful omission in monthly returns by an assessee who has elected to be assessed on that basis, and suppression may be inferred for an earlier period where surrounding circumstances reasonably support such an estimate.

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