Revisional power over reduced penalty upheld where conscious suppression was found but appellate discretion lacked cogent reasons.

Revisional interference was upheld where the appellate authority reduced penalty for conscious suppression of turnover without cogent reasons or a judicial exercise of discretion. The first appellate authority had sustained the finding of suppression but cut the penalty to 75% of tax due merely because the maximum penalty seemed high, without any special or extenuating circumstance. On those facts, the superior authority could lawfully invoke suo motu revisional power to correct the improper reduction, and restoration of penalty at one-and-a-half times the tax due was sustained.

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Issues: Whether the Joint Commissioner could, in exercise of suo motu revisional power, interfere with the first appellate authority's reduction of penalty for suppressed turnover, and whether the appellate reduction of penalty was justified on the facts.

Analysis: The assessment records showed conscious suppression of turnover, and the first appellate authority itself sustained the finding of suppression while reducing the penalty to 75 per cent of the tax due. The reduction, however, was made without any special or extenuating circumstance and without a reasoned application of mind. Section 34 of the Tamil Nadu General Sales Tax Act, 1959 conferred wide revisional power on the superior authority to revise an order passed in appeal when the subordinate authority had not exercised discretion judicially. A reduction of penalty in a case of proved and conscious suppression required cogent reasons; a bare statement that the maximum penalty appeared high was not a proper exercise of discretion.

Conclusion: The Joint Commissioner was entitled to interfere under section 34, and restoration of the penalty at 11/2 times the tax due was upheld. The appeals failed.

Ratio Decidendi: Where an appellate authority reduces penalty for conscious suppression of turnover without assigning cogent reasons or exercising discretion judicially, the revisional authority may lawfully interfere under its suo motu revisional jurisdiction.

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