Wilful non-disclosure is mandatory before penalty can be sustained in reassessment under sales tax law.

Penalty in reassessment proceedings under the Tamil Nadu General Sales Tax Act can be sustained only where the assessing authority records a definite finding that the escaped turnover resulted from wilful non-disclosure. A mere best judgment reassessment, inspection-based inference, or incorrect reference to another penal provision does not satisfy the statutory requirement. The text notes that the reassessment order levied penalty without clearly finding wilful suppression, and the Tribunal proceeded on an incorrect footing by treating the matter as one under a different assessment provision. On that basis, the penalty was held not sustainable and the assessee succeeded.

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Issues: Whether penalty could be sustained in a reassessment made under section 16 of the Tamil Nadu General Sales Tax Act in the absence of a definite finding of wilful non-disclosure of assessable turnover.

Analysis: The reassessment order proceeded on the basis of inspection results and ultimately levied penalty, but it did not record a clear finding that the escaped turnover was wilfully suppressed. Under section 16(2) of the Tamil Nadu General Sales Tax Act, penalty in reassessment is permissible only where the assessing authority is satisfied that the escape from assessment was due to wilful non-disclosure of assessable turnover. A mere best judgment reassessment or a wrong reference to another penal provision does not dispense with that statutory requirement. The order of the Tribunal was found to have proceeded on an incorrect footing by treating the assessment as one under section 12(2), whereas the case was one of reassessment under section 16.

Conclusion: Penalty was not sustainable in the absence of a definite finding of wilful suppression, and the assessee succeeded.

Ratio Decidendi: In reassessment proceedings, penalty can be imposed only on a recorded finding of wilful non-disclosure of assessable turnover, and it is not an automatic consequence of best judgment reassessment.

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