STATE OF TAMIL NADU Vs. MADANCHAND MAHESHKUMAR

JUDGEMENT

(1.) THE respondent did not file a return in form A-1 under the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act") for the assessment year 1972-73. When summoned to produce the accounts, he did not respond. By an order dated August 22, 1977, he was assessed on a total and taxable turnover of Rs. 8, 11, 804.75. While the first appeal against the order was dismissed, a second appeal to the Tribunal resulted in a remand order, mainly for the purpose of affording an opportunity to the respondent to produce their accounts. However, when a notice was issued by the assessing authority, after remand, the assessee neither produced his accounts nor cared to make a representation. THE shop of the assessee had been inspected on October 17, 1972 by the Assistant Commercial Tax Officer. THE Intelligence Wing Officer inspected both his shop and residence on May 29, 1972 and recovered certain account books and slips. THEre were also a stock of six imported watches and 31 watch straps. It was thus clear that the assessee was dealing in watches. From the account books and the records seized from the place it was found that there was sale of watches to the tune of Rs. 7, 65, 928 from April 1, 1972 to May 25, 1972.

(2.) THERE was clear attempt to suppress the sale of watches by recording only abbreviations and using a sort of coded language. For instance the following entries were explained to mean the correct facts as noted in the right hand side column : Abbreviation or Real meaning code language C.G. (2) 3.00 Two camy gold watches at Rs. 300 Tre St (1) 1.10 One tressed steel watch at Rs. 110 R.S. (2) 2.20 Two rice square watches at Rs. 220 Similarly the expenses were also in a sort of code language. It was also found that the entire transactions had not been accounted for in the regular books. The suppression was worked out at Rs. 7, 65, 928 taxable at 15 per cent. It was therefore proposed to resort to best of judgment and impose a penalty at 1 1/2 times the tax due on the actual suppression of Rs. 7, 65, 928. A notice was issued inviting objections. The assessee did not respond again. The assessing authority confirmed his proposal in his order dated January 23, 1981. The appeal to the Appellate Assistant Commissioner failed. Regarding levy of penalty, with which we are concerned in this revision, the appellate authority recorded a finding as follows : "In this case the turnover has not been disclosed both in the returns and also in the accounts and the assessment has been made on best judgment basis. The levy of penalty is therefore called for. I therefore find on the facts and in the circumstances of the case, that the assessing officer is justified in levying penalty at the maximum rate. I sustain the penalty levied." *