The Tribunal should provide proper reasons for reducing the suppressed sales turnover and the penalty.

THANIKKACHALAM, J.

The assessee is the petitioner. The assessee is Hindustan Steel Distributors, No. 11, Sembudoss Street, Madras-1, dealing in iron and steel. The assessee filed a return, showings turnover of Rs. 37, 44, 925.56 and claimed second sale exemption for the assessment year 1979-80. There was a raid conducted by the Income-tax Department. The assessing officer on check of accounts found that the place of business of the assessee was inspected by the Income-tax Department officers, who recovered certain records and also verified the stocks and noticed excess stock of 5.229 tonnes of iron and steel and also found undisclosed stock of 36.707 tonnes in the unregistered open-yard. The further investigation of the record recovered by the Income-tax Officer revealed that the assessee have sold 22 items of iron and steel goods, totally weighing 218.243 tonnes for which relevant purchase bills were not available. On the basis of this verification, the assessing officer arrived at the suppressed quantity as 253.346 tonnes and estimated the suppressed sales turnover at Rs. 7, 60, 038, taxable at 4 per cent and also levied a penalty of Rs. 7, 548. On appeal, the Appellate Assistant Commissioner estimated the suppressed quantity as 160 tonnes and arrived at the suppressed turnover at Rs. 4, 80, 000 and also reduced the penalty to Rs. 5, 000. Thus the order passed by the assessing officer was modified by the Appellate Assistant Commissioner.

2. Aggrieved, the assessee filed an appeal before the Appellate Tribunal. The Tribunal considering the overall facts, thought fit to fix the suppressed turnover roughly at Rs. 2 lakhs, taxable at 4 per cent and the Tribunal also held that the levy of penalty of Rs. 1, 500 would be reasonable. Accordingly, the penalty was reduced from Rs. 5, 000 to Rs. 1, 500. In that view of the matter, the Tribunal modified the order passed by the Appellate Assistant Commissioner. It is against this order, the assessee is now in revision before this Court.

3. The learned counsel appearing for the assessee submitted as under :

The assessing officer based his order on the preliminary report prepared by the Income-tax Officer. The Income-tax Department after finalisation of account, fixed the suppressed sales at Rs. 11, 740 on 2.717 M.T. Therefore, according to the counsel, if at all any addition is warranted on suppressed sales turnover, it would be only Rs. 11, 740 and nothing more. The learned counsel further submitted that before the authorities below, detailed explanations were filed showing the quantity of iron and steel sold, relating to 531 tonnes would cover the sales turnover of 22 items said to have been suppressed by the asssessee. According to the learned counsel, the explanation offered by the assessee was not accepted by the department. It was further pointed out that when the department accepted the explanation of the assessee for 93 tonnes, it ought to have accepted the explanation offered by the assessee for the remaining 160 tonnes also. Therefore, it was submitted that when the sales turnover of 160 tonnes is included in the sales turnover of 531 tonnes, the contention of the department that sales turnover of 160 tonnes was not disclosed, is unacceptable. The learned counsel again pointed out that in the open-yard the goods belonging to other concerns were also deposited and the goods belonging to the assessee were separately accounted for and furnished to the department, which was not accepted. It was, therefore, submitted that inasmuch as the assessee explained the sale of iron and steel to the extent of 531 tonnes, which was accepted by the Income-tax Department, except 2.717 metric tonnes, there is no reasonableness on the part of the Sales Tax Department to refuse to accept the explanation offered by the assessee in the matter of sales turnover of 160 tonnes.

4. On the other hand, the learned Additional Government Pleader (Taxes), while supporting the order passed by the Tribuna