GOVINDAN NAIR, C.J.

Thvl. Kathiresan Yarn Stores, registered dealers under the Tamil Nadu General Sales Tax Act, are the revision-petitioners. They were carrying on business in handloom cloth and art silk yarn. The department came to know that the revision petitioners had imported art silk to the value of Rs. 4, 25, 243 through the Port of Bombay. The assessing authority, on estimate basis, fixed the petitioners' taxable turnover at Rs. 4, 67, 767, 30 by adding 10 per cent of Rs. 4, 25, 243 to that amount. This addition was towards gross profit to the purchase turnover. The amount so fixed, Rs. 4, 67, 767.30, was assessed at 2 per cent under section 12(2) if the Act, and a penalty of Rs. 14, 033 was also imposed on the petitioners under section 12(3) of the Act. The appeal taken by the petitioners to the Appellate Assistant Commissioner and the Tribunal failed. Before the Tribunal three points were raised by the petitioners : (i) The assessment was barred by time, as the assessment was made beyond the period of five years from the expiry of the year to which the tax related. (The assessment year was 1964-65); (ii) The turnover was not liable to tax; and (iii) The imposition of penalty was unjustified. The point of limitation was raised on the basis of section 16(1)(a) of the Act. The Tribunal found that this was not a case of escaped turnover being assessed under section 16 of the Act. It referred to the initiation of proceedings under section 12 of the Act to assess the petitioners on a total turnover of Rs. 11, 59, 309.05 for the year 1964-65 by notice dated 18th July, 1966, and the reply of the petitioners to the notice dated 1st September, 1966. On subsequent occasions the petitioners had also asked for time to produce the accounts before the assessing authority. A further notice was issued on 15th December, 1969, by proposing the assessment now in dispute. Later, the assessment was confirmed on that basis by an order dated 30th November, 1972. No question of limitation can arise where action has been taken under section 12(2) of the Act. The Tribunal, therefore, rightly negatived the plea of limitation. The second point raised before the Tribunal was based on the contention that, though the art silk was admittedly imported through the Port of Bombay, the art silk was never brought to the State of Tamil Nadu, that it was never converted into handloom cloth and that it was never sold in Tamil Nadu The dealers also contended that the art silk itself was sold in Bombay. But there was no proof of such sale of the art silk in Bombay. In those circumstances, the Tribunal took the view that, the dealers not having established the case pleaded by them, an inference could be drawn that the goods were brought to Madras, converted into handloom cloth and sold in Madras. This view was supported by the decision in State of Madras v. Mohammed Samiulla Sahib and Company relied on also by the Tribunal. We see no reason to interfere with the view taken by the Tribunal on this point. The only other point remaining to be considered is whether the imposition of penalty, in the circumstances of the case, was justified. Penalty was imposed under section 12(3) of the Act. Sub-section (3) of section 12, as it stood at the relevant time, was in these terms :

"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 the dealer in his return or, in the case of failure to submit a return, one and half times the tax assessed, as the case may be."The sub-section has been amended by Act 31 of 1972, and the words" not wilfully disclosed"were substituted for the words" not disclosed" *

. On the wording of sub-section (3) it was contended that the sub-section did not require any conscious violation of any provision of the Act and that no mental element to