Best judgment assessment alone does not justify penalty without a clear finding of wilful suppression of turnover.

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 cannot be sustained merely because a best judgment assessment enhanced turnover. A best judgment assessment does not automatically establish wilful suppression, and penalty requires a clear finding of deliberate suppression or contumacious conduct. In the absence of any specific or telling finding by the assessing authority that turnover had been wilfully suppressed, revisional interference based only on the enhanced assessment was unjustified, and the cancellation of penalty was upheld in favour of the assessee.

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Issues: Whether penalty could be levied under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 on the basis of best judgment assessment without a finding of wilful suppression of turnover.

Analysis: A best judgment assessment does not, by itself, lead to an automatic inference that the assessee had wilfully suppressed turnover. Penalty, being penal in character, requires a clear finding that the assessee's conduct involved deliberate suppression or contumacious behaviour. In the absence of any direct or telling finding by the assessing authority that the turnover had been wilfully suppressed, the revisional authority could not proceed on assumption and impose penalty merely because the assessed turnover was enhanced.

Conclusion: The levy of penalty was not sustainable and the finding cancelling the penalty was upheld in favour of the assessee.

Final Conclusion: The revisional interference with the penalty was not justified, and the dismissal of the tax case left the cancellation of penalty undisturbed.

Ratio Decidendi: Penalty for suppressed turnover cannot be sustained on a mere best judgment assessment unless there is a specific finding of wilful suppression.

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