Penalty for second sales exemption claim fails where books and returns support the claim and suppression is not shown.

Penalty could not be sustained where the assessee's claim for second sales exemption was supported by books of account and returns, and the relevant materials were already before the assessing authority. The court noted that section 16(2) applies only when there is suppression in the books or when the returns are rejected as incomplete or incorrect, leading to a best judgment assessment. As those statutory conditions were not met, the deletion of penalty was upheld and no interference was called for.

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Issues: Whether penalty could be sustained when the assessee's claim for second sales exemption was supported by books of account and returns, and the materials were available before the assessing authority.

Analysis: The disputed turnover was supported by the assessee's records and return, and the exemption had initially been granted. Section 16(2) could be invoked only where there was suppression in the books of account and the returns were rejected as incomplete or incorrect, leading to a best judgment assessment. Since the materials were available before the assessing authority, the statutory conditions for invoking penalty were not satisfied.

Conclusion: The deletion of penalty was upheld and no interference was called for.

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