Penalty for tax evasion sustained where undisclosed receipts were treated as sale consideration, not contractual advances.

Penalty under section 45A of the Kerala General Sales Tax Act was upheld where verification and confirmation letters showed that the receipts represented sale consideration for timber sizes supplied for loom construction, not advances or payments for contract work. As the amounts were not reflected in the accounts and the authorities found an attempt to evade tax, invocation of penalty was justified. The assessee could not rely on the setting aside of penalty for another assessment year, because that year involved materially different facts and a composite contract element requiring separate examination. The revisional affirmation was therefore correct.

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Issues: Whether penalty imposed under section 45A of the Kerala General Sales Tax Act, 1963 for the assessment year 1984-85 was justified, and whether the order could be interfered with on the ground that penalty for the assessment year 1985-86 had been set aside in a connected proceeding.

Analysis: The amount received from the two co-operative societies for 1984-85 was found, on verification and confirmation letters, to represent the value of timber sizes supplied for construction of looms. The receipts were not advances or amounts received for contract work, and the transactions did not involve any element of work or labour. The authorities found that the amounts had not been reflected in the accounts and that the assessee had attempted to evade tax, justifying invocation of section 45A. The fact that penalty proceedings for 1985-86 were dealt with differently did not assist the assessee, because the revisional order itself showed that the transactions for 1985-86 were materially different and involved a composite contract element requiring separate examination.

Conclusion: The penalty for 1984-85 was validly imposed and its affirmation by the revisional authorities and the learned single Judge was correct.

Ratio Decidendi: Penalty for wilful tax evasion under section 45A is sustainable where undisclosed receipts are found, on the materials, to be sale consideration and not contractual advances, and a different result in another assessment year does not govern the case unless the factual matrix is identical.

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