Penalty for wilful suppression requires evidence of culpable conduct; an estimated stock difference alone cannot justify penalty.

Penalty under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959 could not be sustained without material showing mens rea, wilful non-disclosure, or other blameworthy conduct by the assessee. The stock difference noticed on inspection was treated as an estimate, and the tax addition by itself did not supply incriminating material to justify penalty. As no finding had been recorded that the assessee had wilfully suppressed taxable turnover or acted with culpable intent, the statutory precondition for penalty was not met. The deletion of penalty was therefore consistent with the requirement that discretion be exercised only on evidence of deliberate escapement.

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Issues: Whether penalty could be sustained under section 16(2) of the Tamil Nadu General Sales Tax Act, 1959, in the absence of material showing mens rea, wilful non-disclosure, or other blameworthy conduct on the part of the assessee.

Analysis: The stock difference found on inspection was treated by the appellate authority as an estimate, and the tax addition itself did not establish any further incriminating material or culpable conduct. The authorities below had recorded no finding that the assessee acted with mens rea or wilfully suppressed taxable turnover. The provision governing penalty requires satisfaction based on material that the escapement of tax resulted from wilful non-disclosure, and the authorities' discretionary power must be exercised on that basis. On the facts found, the deletion of penalty was consistent with the statutory requirement.

Conclusion: The penalty was not leviable and its deletion was upheld.

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