2008 (11) TMI 642

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....al deleted the stock variation and the equal addition and also set aside the penalty. As regards the slips, the Tribunal accepted the explanation of the assessee and set aside the order of remittal and granted the relief as prayed for. As regard the suppression, relating to the books marked B, C and D, the Tribunal arrived at the suppression of Rs. 17,78,835, as against the sum of Rs. 20,85,634 adopted by the assessing officer. However, the Tribunal deleted the addition since it found there was no justification for the same. Finally, the Tribunal decided that the imposition of penalty was definitely warranted, but reduced the penalty to 50 per cent. The learned counsel for the appellant raised two questions of law at the time of arguments. (1) Whether the Tribunal erred in concluding that there was suppression on the basis of B, C and D books especially when the appellant had given an acceptable explanation, and the entries in the books could not be related to sales? (2) Whether in the absence of any finding regarding wilful suppression, the penalty was justified? The learned counsel submitted that in the assessee's factory employees worked in several shifts. So, the approx....

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....le the Tribunal has considered the explanation of the assessee, granted some relief but was unable to accept the same in toto. This is a factual finding on consideration of the materials before the Tribunal. So we are unable to interfere and the question is answered in the negative. Now we come to the award of penalty (i) Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 (Mad) [FB] held (at page 127): ". . . All the circumstances of the case will have to be carefully scrutinised and the question whether penalty should be imposed must be considered on the basis of the judicial determination of the question whether grounds exist for the imposition of such penalty. In order that penalty may be imposed, it must be possible first to come to the conclusion that there was actually turnover and further that that turnover was not disclosed. The mere fact of a best judgment assessment, particularly when the assessment is based on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty, for the degree of proof required for the imposition of penalty is quite different from an....

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....ion with regard to the levy of penalty observed: 'In the circumstances of the case we feel that this is not a case for levying penalty and the penalties levied under the Tamil Nadu General Sales Tax and Tamil Nadu Addition Sales Tax Acts are set aside, and the turnover refixed by the Appellate Assistant Commissioner is confirmed.' We find from the order of the Tribunal that nothing irrelevant was taken into consideration nor anything relevant left out while deleting the penalty. The mere non-acceptability of an explanation of an assessee with regard to certain entries cannot ipso facto lead to a conclusion that the assessee had wilfully suppressed the turnover. But be that as it may, since the Tribunal did not find any wilful suppression on the part of the assessee to disclose the turnover, the exercise of discretion cannot be said to be perverse or non-judicious as to call for interference in exercise of the revisional powers of this court. From the facts and circumstances of the case, we are satisfied that the Tribunal exercised the discretion properly and judiciously, in the peculiar facts and circumstances of the case. We therefore do not find any reason to interfere ....

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....he B, C, D book and the entries in the R.G. 1 register. In State of Tamil Nadu v. S & S Industries [1992] 87 STC 120 (Mad) also the entries in the pocket book tallied except to the extent of Rs. 58,110 the assessee gave an explanation, which was not convincing, but he did not dispute the entries. The Tribunal held that this ipso facto would not amount to wilful suppression. This court confirmed this. In State of Tamil Nadu v. Thangadurai [1983] 52 STC 279 (Mad) also this court said that incriminating documents may be taken into account for assessment, if no satisfactory explanation is given; but for penalty there should be wilful suppression. Here the penalty is awarded because ". . . it is for the appellants to explain the entries in relation to the regular books of account maintained by them, and inasmuch as there is a difference between the records recovered and the regular books of account, the natural inference is that the difference ought to have been disposed of out of books which is normal in this line trade". So there is no evidence of suppression but only inference of suppression on the ground of non-explanation. And on that basis penalty has been awarded. This is exact....