Penalty for incorrect return applies only when assessment follows accepted books of account, not best judgment assessment.

Penalty under the Tamil Nadu General Sales Tax Act was confined to assessments made on accepted books of account where the return was found to be incorrect or incomplete; in that setting, deliberate concealment was not required, though bona fides remained relevant to whether the return was truly defective. Where the accounts were rejected and the assessment was made by best judgment, the penalty provision did not apply. The matter was remitted because the assessing order contained conflicting indications on whether the assessment had proceeded on the books or independently of them, and the essential factual basis for penalty had not been recorded.

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Issues: Whether penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959 is attracted where the return is found to be incorrect or incomplete, and whether the applicability of that provision depends on whether the assessment is made on the basis of the books of account or de hors the accounts.

Analysis: Section 12(3) deals with best judgment assessment, while section 12(4) operates where the assessment is made on the basis of accepted books of account and the return does not truly reflect those accounts. The words used in section 12(5) do not require proof of deliberate concealment in the same manner as provisions dealing with wilful suppression, but bona fides cannot be ignored in deciding whether a return is truly incorrect or incomplete. A penalty under section 12(5) is attracted only when the assessment proceeds on the basis of the books of account and the return is found to be inconsistent with them. If the assessment is made after rejecting the accounts and resorting to best judgment, the matter falls outside that provision. On the facts, the assessing authority's order contained conflicting indications on whether the assessment was based on the accounts or made independently of them, and the crucial factual foundation for penalty was not .

Conclusion: The legal position was clarified in favour of the Revenue that section 12(5) can apply without proof of deliberate concealment where the assessment is based on accepted books and the return is incorrect or incomplete, but the case was remitted because the necessary factual finding had not been recorded.

Ratio Decidendi: Penalty under section 12(5) of the Tamil Nadu General Sales Tax Act, 1959 is attracted when an assessment is made on the basis of accepted accounts and the return is found to be incorrect or incomplete, but the provision does not apply where the assessment is made by best judgment after rejection of the accounts.

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