Colourable transactions and suppressed turnover justify reassessment and penalty for wilful suppression under sales tax law.

Colourable or fictitious sales and repurchases used to suppress turnover may be disregarded for tax purposes, and the assessing authority may reassess the real taxable turnover on the basis of genuine transactions. Where the transactions are mere book entries between concerns managed by the same person and the finding of wilful suppression is established in the assessment proceedings and remains unrebutted, penalty for suppression is sustainable under the Act. The matter was treated as one of escaped turnover and evasion, not as a case of sale below market price governed only by section 14-B of the Andhra Pradesh General Sales Tax Act, 1957. The challenge to reassessment and penalty was rejected.

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Issues: Whether the reassessment and penalty were sustainable where the dealer's sales and purchases were found to be colourable transactions entered into to evade tax, and whether the matter was governed by section 14(4) or section 14-B of the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The turnover disclosed by the dealer was found to be suppressed through transactions between the dealer and another firm managed by the same person. The sales and repurchases were treated as mere book entries and ignored for tax purposes, the real taxable turnover being determined on the basis of the genuine transactions. On those facts, the case was not one of mere sale at a price below market price falling within section 14-B, but one of escaped turnover and evasion reflected by colourable dealings. The finding of wilful suppression, already recorded in the assessment proceedings and not rebutted in the penalty proceedings, justified penalty under section 14(8). The earlier decision relied on by the assessee was distinguished on facts.

Conclusion: The reassessment and the penalty were upheld and the objection that section 14-B alone applied was rejected.

Ratio Decidendi: Where transactions are found to be colourable or fictitious and are entered into to evade tax by suppressing turnover, the assessing authority may ignore those transactions, reassess the real turnover, and levy penalty for wilful suppression under the Act.

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