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Issues: Whether penalty could be levied under section 45A(1)(d) of the Kerala General Sales Tax Act, 1963, when the omitted turnover was disclosed in the assessee's trading accounts and the assessment did not rest on a best judgment basis.
Analysis: The omission from the statutory return was not treated as conclusive proof of an incorrect or untrue return, because the same turnover was reflected in the trading accounts and the assessing authority relied on those accounts in reaching its conclusion. The legal position applied was that penalty for an incomplete or incorrect return is attracted only where the assessment is made to the best of judgment; where the omitted items are available from the dealer's own accounts and are taken into account in the assessment, the foundation for best judgment assessment is absent. On those facts, the proceedings for penalty could not be sustained.
Conclusion: Penalty under section 45A(1)(d) was not exigible, and the levy was unsustainable.
Final Conclusion: The penalty orders were quashed and the amount recovered was directed to be refunded to the assessee.
Ratio Decidendi: Penalty for filing an incorrect or incomplete return cannot be imposed unless the assessment is made on a best judgment basis; where the omitted turnover is disclosed in the dealer's own accounts and is used in assessment, the statutory basis for penalty fails.
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