Concessional sales tax declarations may be accepted on appeal, while penalty fails absent a true best judgment assessment.

Statutory declarations supporting concessional sales tax under section 3(3) may be accepted at the appellate stage where the Act does not prescribe an inflexible filing deadline, and a rule cannot narrow the statutory benefit by fixing a stricter time limit. Penalty under section 12(3) is confined to assessments made to the best of judgment for an incomplete or incorrect return; where the books are accepted and additions are based on entries already disclosed, the assessment is not best judgment and penalty is not sustainable.

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Issues: (i) Whether the assessee was entitled to the concessional rate of tax under section 3(3) on the strength of declaration forms produced before the Appellate Assistant Commissioner; and (ii) whether penalty was leviable under section 12(3) when the additions were based on entries found in the regular books and the assessment ceased to be a best judgment assessment.

Issue (i): Whether the assessee was entitled to the concessional rate of tax under section 3(3) on the strength of declaration forms produced before the Appellate Assistant Commissioner.

Analysis: The proviso to section 3(3) requires a prescribed declaration, but the statute itself does not impose a rigid time-limit for filing it. Rule 22(5) of the Tamil Nadu General Sales Tax Rules could not curtail the statutory benefit by fixing an inflexible deadline. The declarations were filed at the appellate stage when the assessee bona fide proceeded on the footing that the transactions were not taxable, and there was no legal impediment to their being taken into account.

Conclusion: The assessee was entitled to the concessional rate of tax under section 3(3).

Issue (ii): Whether penalty was leviable under section 12(3) when the additions were based on entries found in the regular books and the assessment ceased to be a best judgment assessment.

Analysis: Penalty under section 12(3) is attracted only where the assessment is made to the best of judgment on account of an incomplete or incorrect return. Where the books of account are accepted and the additions ultimately rest on entries disclosed in those books, the assessment cannot be treated as a best judgment assessment. The case did not involve suppression cured only after detection by a supplementary return, and the earlier authority relied on by the Revenue was distinguishable.

Conclusion: Penalty was not leviable under section 12(3).

Final Conclusion: The Tribunal's order granting concessional treatment and deleting the penalty was upheld, and the revision filed by the State failed.

Ratio Decidendi: A statutory declaration supporting concessional tax treatment may be accepted at the appellate stage if the Act does not prescribe an inflexible time-limit, and penalty for an incorrect or incomplete return cannot be sustained unless the assessment is truly one made to the best of judgment.

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