Penalty for suppressed turnover is not automatic when assessed sales are supported by the dealer's books of account.

Penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act was considered in relation to assessed turnover taken from the dealer's books of account. The governing principle is that penal action is justified only where the assessment rests on an incomplete or incorrect return and the circumstances show suppression or concealment of turnover. Where the turnover is already recorded in the accounts and no deliberate suppression is proved, mere addition in assessment does not by itself attract the penalty. On that basis, the penalty was held not sustainable against the assessee.

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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 assessed turnover was drawn from the books of accounts and no suppression was established.

Analysis: The assessment and the appellate records showed that the turnover was based on entries in the dealer's books and that there was no proved concealment or suppression of turnover. The statutory scheme of section 12(3)(b), read with the settled position on section 12(2), permits penalty in cases where the assessment is founded on an incomplete or incorrect return and the circumstances justify penal action. Where the turnover is already reflected in the accounts and the addition does not rest on a finding of deliberate concealment, the penal provision is not attracted. The Court followed the principle that penalty cannot be levied mechanically merely because an addition is made in assessment, particularly when the material does not disclose suppression.

Conclusion: Penalty under section 12(3)(b) was not sustainable and the issue was decided in favour of the assessee.

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