Penalty for suppressed turnover not sustainable where sales were recorded in books and no concealment was proved

Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act is attracted only where the assessment under Section 12(2) on a best judgment basis is supported by material showing suppression or concealment. Where the turnover is disclosed in the assessee's books and no clandestine omission is proved, an incorrect or incomplete return by itself does not justify penalty. The estimate made by the authorities was insufficient on its own to sustain the penal levy, and deletion of the penalty was justified.

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Issues: Whether penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959 was sustainable when the turnover was reflected in the books of accounts and no suppression or concealment was established.

Analysis: Penalty under Section 12(3)(b) is linked to an assessment made under Section 12(2) on a best judgment basis, and the levy depends on the nature of the assessment and the material showing concealment or suppression. Where the turnover is drawn from the assessee's accounts and there is no proved suppression, the penal provision is not attracted merely because the return is treated as incorrect or incomplete. The material on record did not establish that the turnover was clandestinely omitted, and the authorities' estimate by itself was insufficient to sustain penalty.

Conclusion: Penalty under Section 12(3)(b) was not leviable and its deletion was justified.

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