Penalty for wilful suppression requires a finding on bona fides; mere return-account discrepancy was insufficient here.

Penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 could not be sustained unless the authority recorded a finding of lack of bona fides or wilful suppression; a mere discrepancy between the return and the accounts was insufficient. The Tribunal restored the penalty only on the basis of suppression and best judgment assessment, without examining the assessee's bona fides, while the record showed disclosure of the relevant entries in the books and partial deletion of turnover. On that footing, the restored penalty was set aside and relief was granted to the assessee.

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Issues: Whether penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 could be sustained without a finding on the assessee's bona fides and wilful suppression.

Analysis: Penalty under section 12(3) is not attracted merely because the return is found to be incorrect or a difference exists between the return and the accounts. The authority must record a finding that the assessee lacked bona fides or had made a wilful suppression. The Tribunal restored the penalty only on the basis of suppression and best judgment assessment, without examining the assessee's bona fides. The record also showed that the assessee had disclosed the entries in the books, and even part of the turnover had been deleted by the Tribunal itself.

Conclusion: The penalty could not be sustained. The order restoring penalty was set aside and relief was granted to the assessee.

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