Suppressed turnover from unaccounted records cannot be split on speculation, and proven wilful suppression supports penalty.

Suppressed turnover detected from unaccounted records cannot be apportioned on a speculative 50:50 basis between taxable and exempt sales unless the assessee proves that the transactions relate to tax-suffered or exempt goods. The earlier apportionment precedent was held inapplicable because the goods were grams and no evidentiary basis supported an equal split. Where inspection records affirmatively establish unaccounted transactions and the assessee fails to reconcile them with the regular books, the conduct amounts to wilful suppression rather than a mere technical lapse, so penalty is warranted.

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Issues: (i) Whether the suppressed turnover found in the unaccounted records could be apportioned in the ratio of 50:50 between taxable and exempted sales; (ii) whether penalty levied on the basis of the proved suppression was liable to be deleted.

Issue (i): Whether the suppressed turnover found in the unaccounted records could be apportioned in the ratio of 50:50 between taxable and exempted sales.

Analysis: The suppression of turnover was detected from records recovered during inspection and those transactions were not reflected in the regular accounts. The 50:50 apportionment adopted by the Tribunal was based on a precedent turned on its own peculiar facts, where the nature of the goods and surrounding circumstances justified such a presumption. Here, the goods were grams and the assessee had not proved that the transactions represented purchases of tax-suffered goods or that the turnover could be treated as partly exempt. The earlier precedent on apportionment was therefore inapplicable, and the suppression could not be reduced by adopting an artificial equal division.

Conclusion: The 50:50 allocation was unsustainable and the suppression fixed by the first appellate authority had to be restored.

Issue (ii): Whether penalty levied on the basis of the proved suppression was liable to be deleted.

Analysis: The inspection records clearly established unaccounted transactions and the assessee failed to correlate them with the regular books. In such circumstances, the failure to explain the transactions was not a mere technical lapse but amounted to wilful suppression. The precedent relied on to delete penalty involved a materially different situation and did not govern a case where suppression stood affirmatively established from incriminating records.

Conclusion: Deletion of penalty was unjustified and the penalty imposed by the first appellate authority was restored.

Final Conclusion: The Tribunal's reliefs on both suppression apportionment and penalty were set aside, and the assessment as modified by the first appellate authority stood revived in full.

Ratio Decidendi: Where suppressed turnover is proved from unaccounted records and the assessee fails to establish that the transactions fall within an exempt or tax-suffered category, the turnover cannot be apportioned on a speculative basis and wilful suppression warrants penalty.

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