Penalty on accepted book turnover fails, but suppression-based penalty stands where omission from returns was wilful.

Penalty under the best judgment provision is not leviable on turnover taken from the assessee's books and accepted in assessment, because that item is no longer part of an incomplete or incorrect return and cannot be treated as best judgment turnover. By contrast, penalty for wilful non-disclosure is sustainable where the turnover was omitted from both returns and surfaced only later before the Tribunal; a later contention that it belonged to another assessment year does not erase the initial suppression. The absence of an express finding of wilfulness does not prevent inference of deliberate omission from the facts.

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Issues: (i) Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 was leviable when the turnover in question had been taken from the assessee's books and accepted in the assessment; (ii) Whether penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 was sustainable on the footing of wilful non-disclosure of turnover.

Issue (i): Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 was leviable when the turnover in question had been taken from the assessee's books and accepted in the assessment.

Analysis: Section 12(3) applied where an assessment was made under section 12(2) on the basis of incomplete or incorrect returns and involved a best judgment element. The turnover of Rs. 97,547.23 had been found in the books and included in the assessed book-turnover. Once the books were accepted in respect of that turnover, there was no scope for treating that part of the assessment as a best judgment assessment. On that principle, penalty could not be imposed under section 12(3) for that item.

Conclusion: Penalty under section 12(3) was not leviable and the assessee succeeded on this issue.

Issue (ii): Whether penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 was sustainable on the footing of wilful non-disclosure of turnover.

Analysis: The relevant turnover was not disclosed in either return and was brought in only when the matter was before the Tribunal. The circumstance that the assessee later contended that the turnover belonged to the later assessment year did not negative the initial omission. The non-disclosure was treated as deliberate and the absence of an express recital of wilfulness did not matter when the facts themselves compelled that inference.

Conclusion: Penalty under section 16(2) was rightly sustained and the assessee failed on this issue.

Final Conclusion: The challenge succeeded only in relation to the penalty imposed for the turnover already accepted in the books, while the penalty based on deliberate non-disclosure of the omitted turnover was upheld.

Ratio Decidendi: Penalty under the best judgment penalty provision cannot be imposed in respect of turnover taken from accepted books of account, but a penalty for suppression is sustainable where the omission from return amounts to wilful non-disclosure.

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