The Tribunal's determination of the suppressed turnover and the penalty levied on the assessee was reasonable and justified, and the department was not entitled to levy additional sales tax.

Headnote:
TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTION 12(3) - SUPPRESSION OF SALES - INTERPRETATION AND APPLICATION - COURT'S ANALYSIS AND CONCLUSION - AD HOC ADDITION AND PENALTY LEVIED BY THE TRIBUNAL UPHELD.
Fact of the Case:

The assessee, a dealer in provisions and fertilizers, was found to have suppressed sales during the assessment year 1978-79. The assessing officer made additions to the assessee's turnover and levied a penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 (the Act). The Appellate Assistant Commissioner gave partial relief to the assessee, and the assessee filed a second appeal before the Appellate Tribunal. The department also filed an enhancement petition.
Finding of the Court:

The Tribunal found that the assessee had explained most of the alleged suppression and that the department had not disproved the assessee's explanation. The Tribunal also found that the sales had been included in the monthly returns and that tax due on the sales had been paid by the assessee. Accordingly, the Tribunal held that the suppression would not exceed Rs. 5,000 in any case and made an ad hoc addition of Rs. 5,000. The Tribunal also refixed the penalty at Rs. 200 under section 12(3) of the Act. The department filed a revision petition before the High Court.
Issues: 1. Whether the Tribunal was justified in determining the suppressed turnover and the penalty levied on the assessee. 2. Whether the department was entitled to levy additional sales tax.
Ratio Decidendi: The High Court held that the Tribunal's determination of the suppressed turnover and the penalty levied on the assessee was reasonable and justified. The Court noted that the Tribunal had considered the assessee's explanation for the alleged suppression and that the department had not disproved the assessee's explanation. The Court also noted that the sales had been included in the monthly returns and that tax due on the sales had been paid by the assessee. The Court further held that the department was not entitled to levy additional sales tax in view of the Tribunal's order in the quantum appeal and the enhancement petition.
Final Decision: The High Court dismissed the department's revision petition.

Judgment :-

THANIKKACHALAM, J.

The department is the petitioner herein. The assessee is a dealer in provision and fertilisers for the assessment year 1978-79. The assessee reported a total and taxable turnover of Rs. 1, 36, 44, 616 and Rs. 32, 64, 408 respectively. The assessing officer found that there were two inspections during the year under consideration and large scale suppressions were noticed. On April 25, 1978 suppression was noticed to the tune of Rs. 570. The assessing officer added an addition of Rs. 5, 130 being nine times the actual suppression. During the inspection on March 22, 1979 suppressions were noticed on several items. The assessing officer made addition equal to two times the actual suppression. The total suppression was fixed at Rs. 6, 53, 412 and the assessing officer also made an addition of Rs. 2, 000 towards defects in the accounts. Finally, the assessing officer, determined the total and taxable turnover at Rs. 1, 44, 84, 936 and Rs. 39, 21, 841 respectively. The assessing officer also levied a penalty of Rs. 12, 772 under section12(3) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act") for the suppression.

2. On appeal, the Appellate Assistant Commissioner gave partial relief. Aggrieved, the assessee filed a second appeal before the Appellate Tribunal. The department also filed enhancement petition.

3. On considering the facts arising in this case, the Tribunal made an ad hoc addition of Rs. 5, 000 and another addition of Rs. 5, 000 for probable suppression. The penalty was reduced to Rs. 200 under section12(3) of the Act. The enhancement petition filed by the Revenue was dismissed and consequently there was no question of levy of additional sales tax.

4. It is against this order, the department is in revision before this Court. The department is questioning the order passed by the Tribunal in the quantum appeal, enhancement petition and penalty appeal.

5. Learned Additional Government Pleader (Taxes) submitted that the assessee posted the sale entries after the inspection was over. The bills were prepared subsequent to the inspection. The day book chittai and sale bills were manipulated. Therefore, according to learned Additional Government Pleader (Taxes), the assessment made by the assessing officer should be accepted. With regard to the enhancement petition, the learned Additional Government Pleader (Taxes) submitted that but for the timely inspection and search made by the department, the assessee would not have come forward to submit the suppressed turnover for levy of tax. Therefore the actual suppression determined by the assessing officer, should be sustained.

6. On the other hand, the case of the assessee was that it maintained separate accounts for taxable and non-taxable goods, that it is not practicable to maintain separate sales accounts for different kinds of goods handled by the assessee, that the gross profits earned by the assessee is normal, that the excess stocks noted during the inspection was due to incorrect stock taking by the officer, that the shortage noticed is due to non-posting of accounts, that cooly payments entered in the slips were taken as suppressions, was pointed out by the assessing officer, in his order, that the stock difference cannot be treated as suppression, that the assessing officer, himself admitted that the assessee raised sale bills and made entries in the accounts and that all the sales have been accounted for in the accounts and included in the monthly returns. Therefore, it was submitted that the suppression alleged by the assessing officer is unwarranted and the penalty is not justified.

7. The Tribunal pointed out that the difference in stocks were treated as suppressions by the assessing Officer. According to the Tribunal, if the sale bills are taken into account, there will be no shortage or excessive stocks. The assessee has explained most of the stock differences. The Tribunal pointed out that the sales have been i

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