Penalty for rejected exemption claim not sustainable without concealment or inaccurate particulars being clearly established.

Penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act was held unjustified where the assessee had fully disclosed the transactions in its books and there was no finding of wilful suppression or concealment. The disallowance of the exemption claim by itself did not justify penalty. Applying the same principle recognised under section 271(1)(c) of the Income-tax Act, the Court treated penalty as dependent on a clear finding of concealment of income or furnishing of inaccurate particulars. In the absence of such a finding, the Revenue's revision failed.

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Issues: Whether penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was leviable when the assessee's claim for exemption was rejected, but the transactions were reflected in the books of account and no wilful suppression or concealment was found.

Analysis: The assessee had disclosed the transactions in the books of account and there was no finding of wilful suppression. The penalty was imposed only because the exemption claimed by the assessee was disallowed. In deciding the issue, the Court relied on the principle that, where all particulars are disclosed and the dispute is only about the acceptability of a claim, penalty is not justified unless there is a clear finding of concealment of income or furnishing of inaccurate particulars. The Court applied the same principle as recognised in the context of section 271(1)(c) of the Income-tax Act, 1961.

Conclusion: Penalty was not leviable in the absence of concealment or inaccurate particulars, and the revision by the Revenue failed.

Ratio Decidendi: Penalty cannot be imposed merely because an exemption or deduction claim is rejected; it requires a clear finding of concealment of income or furnishing of inaccurate particulars.

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