Successor assessing authority may impose penalty, but suppression must be proved against the assessee for it to stand.

Section 12(3) allows penalty to be imposed by separate order within the prescribed limitation period, and the power is not confined to the assessing officer who completed the assessment. A successor authority may levy penalty where the original authority did not consider the issue, but not where penalty had been consciously declined. On the facts, the alleged suppression was found to relate to an adjoining concern, so wilful non-disclosure by the assessee was not proved. The legal jurisdiction to act was recognised, but the penalty failed on merits and the cancellation of penalty was sustained.

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Issues: (i) whether a succeeding assessing authority can levy penalty under section 12(3) when the original assessing authority had not imposed penalty at the time of assessment; (ii) whether penalty was justified on the facts when the alleged suppression was found to relate to another concern.

Issue (i): whether a succeeding assessing authority can levy penalty under section 12(3) when the original assessing authority had not imposed penalty at the time of assessment.

Analysis: Section 12(3) permits penalty to be imposed either in the same order of assessment or by a separate order, subject to notice and the five-year limitation in the proviso. The power is not confined to the particular officer who completed the assessment. If the original assessing authority had not considered penalty at all, the authority having jurisdiction, including a successor, may examine the question and levy penalty within the statutory period. Only where the original authority had already applied its mind and consciously declined to levy penalty would a successor be precluded from reopening that discretion.

Conclusion: The succeeding assessing authority could lawfully levy penalty if the original authority had not considered the matter and the order was within limitation.

Issue (ii): whether penalty was justified on the facts when the alleged suppression was found to relate to another concern.

Analysis: Penalty under section 12(3) depends on the existence of wilful non-disclosure or suppression in the assessee's turnover. The Tribunal found that the slip relied on for alleging suppression did not pertain to the assessee's business but to an adjoining concern. That finding negatived the factual basis for the penalty, and the finality of the assessment did not prevent the assessee from disputing suppression in penalty proceedings.

Conclusion: The penalty was not sustainable because no suppression attributable to the assessee was established.

Final Conclusion: The legal position on jurisdiction favoured the Revenue, but the penalty failed on the merits, so the cancellation of penalty was sustained and the revision was dismissed.

Ratio Decidendi: Where the statute authorises penalty to be imposed by separate order within a prescribed period, a successor assessing authority may levy penalty if the original authority had not decided the issue, but the penalty cannot stand unless wilful suppression attributable to the assessee is proved.

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