1965 (7) TMI 42

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....nd to assess finally on the turnover reported by the Income-tax Practitioner. To a notice by the assessing authority inviting objection to his proposal, there was no reply from the assessee. The assessing authority, therefore, proceeded to assess on a best judgment basis fixing the taxable turnover at Rs. 1,48,749.30. It appears the assessee was submitting returns and paying tax under rule 18 of the Tax Rules. For the subsequent year, a different officer happened to reopen the earlier assessment order, referred to the facts on which the assessment was made and concluded that the noninclusion of the sales turnover of Rs. 56,000 by the assessee in his monthly returns in Form A amounted to suppression of a large turnover. He issued notice to t....

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.... case, the assessing authority shall complete the assessment on a best judgment basis, after making such enquiry as that authority might consider necessary. Before making an assessment on best judgment, it is necessary under the proviso to sub-section (2) that the assessing authority gives a reasonable opportunity to the assessee of proving the correctness or completeness of any return submitted by him. Then follows the penalty provision which is sub-section (3). It reads as follows: "(3) When making any assessment under sub-section (2), the assessing authority may also direct the dealer to pay, in addition to the tax assessed, a penalty not exceeding one and a half times the amount of tax due on the turnover that was not disclosed by th....

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....st judgment assessment, and a decision to levy penalty is necessarily arrived at in the course of the proceedings under sub-section (2). The assessment proceeding based on best judgment is a quasi-judicial proceeding, and so too the levy of penalty under sub-section (3), and what is contemplated by the two sub-sections is one enquiry for both and it follows that the assessing authority while making the assessment by best judgment should also decide at the same time whether a penalty should be levied. On this view of the matter, we are, with great respect, unable to accept the interpretation placed on sub-section (3) in Radhakrishna & Co. v. State of Andhra Pradesh[1962] 13 S.T.C. 117., which learned Government Pleader has pressed before us.....