Penalty cannot stand where assessment is based on formula alone and no suppressed turnover is found.

Penalty was held unsustainable where the assessment rested only on a formula applied to purchase value and gross profit, and no suppressed purchases, concealed turnover, or turnover outside the accounts was found. The Tribunal noted that the addition was not based on a best judgment assessment supported by material showing unrecorded business activity. In the absence of such factual foundation, the levy of penalty could not be maintained, and the Revenue's challenge failed.

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Issues: Whether penalty could be sustained where the assessment was based on adoption of a formula and no turnover outside the accounts was found.

Analysis: The Tribunal had found that the assessing authority had not recorded suppression of purchases or concealment of turnover and that the addition was made only by applying a formula to the purchase value and gross profit. On that footing, penalty was held to be unsustainable in the absence of a best judgment assessment founded on turnovers outside the accounts.

Conclusion: Penalty was not leviable and the challenge by the Revenue failed.

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