Wilful suppression in unaccounted sales justified penalty where coded entries and withheld books proved concealment.

Where watch sales were omitted from returns and accounts, coded entries and repeated non-production of books supported a finding of wilful suppression. The seized materials from the shop and residence disclosed substantial unaccounted sales, and the assessee's own explanations were used to decode the concealed entries. On those facts, the Tribunal's view that the books were not rejected was held inconsistent with the record, and the settled position on best judgment assessment and consequential penalty was applied. The penalty was therefore sustained and the deletion set aside, restoring the penalty order in favour of Revenue.

---

---

Issues: Whether the assessee's failure to disclose watch sales in the returns and accounts, coupled with coded entries and non-production of books, justified levy of penalty on the ground of wilful suppression.

Analysis: The materials seized from the shop and residence showed business in watches and revealed substantial unaccounted sales. The entries were deliberately made in coded language and had to be decoded from the assessee's own explanations, which indicated concealment rather than mere irregularity. The assessee repeatedly failed to produce the accounts despite notices and opportunities. In these circumstances, the Tribunal's view that the books were not rejected or that the records were not unauthorised was inconsistent with the factual findings and ignored the settled position that best judgment assessment and consequential penalty are attracted when transactions are discovered only through search and seizure and not from produced books.

Conclusion: The penalty was rightly attracted and its deletion was unsustainable. The penalty order was restored in favour of Revenue.

---