Bona fide omission of exempt sales turnover defeats penalty where the taxpayer genuinely believed the return was correct.

Penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act was held not leviable where the assessee omitted cattle feed turnover on a bona fide belief that the sales were exempt. The Court treated the assessee's good faith as material and found that earlier assessments had granted exemption, with the later revision occurring only after the relevant return had already been filed. On those facts, the omission was not a deliberate attempt to evade tax, and the assessee's return was accepted as having been filed under a genuine belief of legality. The Revenue's revision therefore failed.

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Issues: Whether penalty under section 12(5)(iii) of the Tamil Nadu General Sales Tax Act, 1959 was leviable when the assessee omitted the turnover of cattle feed sales on the bona fide belief that the sales were exempt.

Analysis: The assessment records showed that the assessee had treated the turnover as non-taxable because earlier assessments had granted exemption, and those assessments were revised only after the return for the relevant year had already been filed. The omission was therefore not found to be a deliberate attempt to evade tax. In deciding penalty under section 12(5)(iii), the assessee's bona fides were material, and the facts showed a genuine belief that the return was in accordance with law.

Conclusion: Penalty was not leviable; the assessee succeeded and the revision by the Revenue failed.

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