Penalty for suppressed turnover confined to the addition actually upheld under best judgment assessment.

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act was held applicable where the returned turnover was rejected and best judgment assessment was made on account of suppressed sales. The sustained addition reflected suppression from both the accounts and the return, so the earlier view that no penalty was leviable was not accepted. At the same time, the penalty could be confined only to the tax attributable to the addition actually maintained, and not to any higher estimate of suppressed turnover. The operative effect was that penalty was limited to the suppressed turnover upheld on assessment.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 was attracted on the facts of the case, and if so, to what extent.

Analysis: The returned turnover was not accepted in full and the assessment was completed by best judgment with an addition of Rs. 20,000 towards suppressed transactions. The sustained addition represented sales suppressed from accounts as well as from the return, and once such suppression was upheld, section 12(3) became applicable. The earlier view that no penalty was leviable was not accepted. However, the higher estimate of suppressed turnover adopted by the Appellate Assistant Commissioner was not sustained, and the penalty had to be confined to the tax relatable to the addition actually maintained.

Conclusion: Penalty under section 12(3) was leviable, but only on the suppressed turnover of Rs. 20,000, resulting in a penalty of Rs. 800 in favour of the Revenue.

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