Wilful suppression finding required for sales tax penalty; turnover estimate upheld, but penalty deleted for lack of clear basis.

Recovered duplicate bills and the absence of any alternative estimation method justified the department's suppression estimate, so the turnover addition was sustained. Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959, however, requires a definite finding that the return was incorrect and that suppression was wilful; best judgment assessment alone does not make penalty automatic. As the assessment and penalty order contained only general references and no clear finding of wilful non-disclosure, the penalty was deleted.

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Issues: (i) Whether the estimate of suppressed turnover based on the recovered bill and multiplication of the disclosed purchase figure was reasonable and liable to be sustained. (ii) Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 could be imposed without a definite finding that the incorrect return or suppression was wilful.

Issue (i): Whether the estimate of suppressed turnover based on the recovered bill and multiplication of the disclosed purchase figure was reasonable and liable to be sustained.

Analysis: The recovered duplicate bill established purchases outside the books, while the earlier bill numbers were not produced. In the absence of any alternative method suggested by the assessee for estimating the suppressed turnover, the method adopted by the department was treated as reasonable in the circumstances. The assessment of the suppressed turnover was therefore upheld.

Conclusion: The estimate of suppressed turnover was sustained and the finding on that issue was against the assessee.

Issue (ii): Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 could be imposed without a definite finding that the incorrect return or suppression was wilful.

Analysis: Penalty under section 12(3) is not automatic merely because a best judgment assessment results in addition to turnover. The assessing authority must record a definite finding that the return was incorrect and that the suppression was wilful. Since the assessment and penalty order did not contain such a clear finding and merely used general language about wilful suppression, the legal requirement for imposing penalty was not satisfied.

Conclusion: The penalty was not exigible and was deleted, which was in favour of the assessee.

Final Conclusion: The turnover addition was maintained, but the penalty could not stand in the absence of a clear finding of wilful suppression, so the revision succeeded only to that limited extent.

Ratio Decidendi: A penalty for suppression under section 12(3) can be imposed only when the authority records a definite finding of wilful non-disclosure or filing of an incorrect return; a best judgment assessment by itself does not justify penalty.

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