Failure to file returns, inability to explain large remittances, and lack of proper records can justify best of judgment assessment and penalty under section 12(3) of the Act.

DR. A. S. ANAND, C.J.

These two tax revision cases have been filed by the assessee against the common order of the Sales Tax Appellate Tribunal, Main Bench, Madras, dated August 10, 1981, concerning the assessment years 1974-75 and 1975-76. The legal and factual questions being common, we are obliged to dispose of these revision cases in common.

2. The assessing authority assessed the petitioner-assessee who is a dealer in varnish for the assessment years 1974-75 and 1975-76 on the basis of an inspection of the place of business by the Central Intelligence Wing Officers. During the inspection, certain records were seized and they revealed large remittances to the bank, and the assessee was called upon to explain those remittances as the assessee did not maintain any books of account whatsoever relating to its trading activities. The assessee did not produce the books of account despite several reminders from the department. The assessing authority, finding that no return had been filed and no account had been produced, was left with no option but to take recourse to best ofjudgment assessment on the basis of the materials seized during the inspection and the extracts of the accounts of the assessee with the Indian Overseas Bank. The deposits with the bank during the assessment year 1974-75 amounted to Rs. 71, 500 while for the assessment year 1975-76, they amounted to Rs. 7, 57, 049.75. Since the assessee was unable to render any explanation or produce any record about the source of the remittances, the assessing authority took the remittances as arising out of the sale transactions and assessed the assessee on Rs. 71, 500 as the taxable turnover for the year 1974-75 and on Rs. 7, 57, 049.75 as the taxable turnover for the year 1975-76. Besides, penalty was also levied under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 Thereinafter referred to as "the Act") on the assessee in respect of both the assessment years. The assessee preferred two appeals before the Appellate Assistant Commissioner. Both the appeals were heard together. The assessee disputed the entire assessment for both the years and also disputed the levy of penalty and the surcharge. The appellate authority, however, did not find any merit in the pleas raised by the assessee and dismissed the appeals, thereby confirming the orders of assessment as also the penalty levied by the assessing authority. The assessee filed second appeals before the Sales Tax Appellate Tribunal, Main Bench, Madras, and both the appeals were again heard together and disposed of by a common order dated August 10, 1981, against which the present revision cases have been filed.

3. Learned counsel for the assessee-petitioner questioned the best of judgment assessment as well as the levy of penalty. Learned counsel argued that though the assessee had not filed the returns and had also not produced the accounts despite giving of opportunities, yet the reason for not filing the returns or producing the accounts was the detention of Thiru T. Kadiresan, the managing partner of the assessee-firm under the Maintenance of Internal Security Act (hereinafter referred to as "MISA"). This plea appears to us to be an argument of despair. On the assessee's own showing before the appellate authority as well as the Tribunal, Thiru Kadiresan was shown to have been detained under MISA on February 8, 1976 and released in July 1976. There was no reason why the return for the year 1974-75 could not have been filed in time prior to the detention under MISA. There is also no reason as to why the accounts were not produced before the assessing authority despite numerous opportunities when the assessment proceedings were taken up in the year 1980 because admittedly the managing partner was not under any detention at that point of time. The assessing authority as well as the appellate authority and the Tribunal concurrently found that the assessee who held a licence in form D.L. 2 with an annua