Penalty for escaped turnover needs proof of wilful non-disclosure; mere "suppression" is not enough.

Penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 requires a recorded finding, supported by material, that escapement of turnover resulted from wilful non-disclosure by the assessee. The mere use of the words "suppressed" or "suppression" in assessment proceedings is not enough to establish the statutory ingredient or the necessary mens rea. In the absence of a specific finding of wilful non-disclosure of assessable turnover, the penalty cannot be sustained. The penalty was cancelled on that basis.

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Issues: Whether penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained on the basis of a finding of "suppression" alone, without a specific finding of wilful non-disclosure of assessable turnover.

Analysis: The penalty provision required the assessing authority to be satisfied that the escapement of turnover was due to wilful non-disclosure by the assessee. The mere use of the words "suppressed" or "suppression" in the assessment or pre-assessment proceedings was not, by itself, conclusive of the statutory ingredient. The department had to establish the necessary mens rea and there had to be material showing a deliberate failure to disclose assessable turnover. In the absence of a finding of wilful non-disclosure, the penalty could not be sustained.

Conclusion: The penalty was rightly cancelled, and the assessee succeeded on the penalty issue.

Ratio Decidendi: A penalty for escaped turnover under section 16(2) cannot be imposed unless the authority records a finding, supported by material, that the escapement was due to wilful non-disclosure; the mere use of the expression "suppression" is insufficient.

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