KHEMCHAND RAJKUMAR Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THIS is an appeal filed by the assessee against the suo motu order passed by the Board of Revenue levying for the first time a penalty of Rs. 22,665, which, according to the Board of Revenue, the assessing officer should have levied under section 12 (3) of the Tamil Nadu General Sales Tax Act, while making the assessment. In the proceedings for assessment, the assessee's account books were rejected on the basis of certain anamath books recovered from the assessee's place of business and a best judgment assessment was made. The said best judgment assessment resulted in an addition of a sum of Rs. 7,60,500 to the turnover of Rs. 9,99,449. 46 returned by the assessee. At the time of making the best judgment assessment under section 12 (2), the assessing authority had not passed any order under section 12 (3 ). Even in the appeal filed before the Appellate Assistant Commissioner by the assessee, the Appellate Assistant Commissioner did not consider the question of penalty leviable under section 12 (3 ). After the appellate authority passed the order granting a relief on a turnover of Rs. 5,000, the Board of Revenue, in exercise of its suo motu powers, called for the records of both the assessing authority as well as the appellate authority, and after due notice to the assessee, revised the order of the assessing authority providing for a penalty of Rs. 22,665. Before us, the learned counsel for the assessee, contends that the Board of Revenue had no jurisdiction to direct the levy of penalty under section 12 (3) in exercise of its suo motu powers. According to the learned counsel, the Board of Revenue in exercise of its suo motu powers cannot pass any original order of assessment or an original order of penalty, which the assessing authority is expected to pass under section 12. It is also pointed out that the assessing authority having failed to exercise its power under section 12 (3) at the time of making the original assessment, there cannot be any levy of penalty at a subsequent stage either by the appellate authority or by the revisional authority. The learned counsel seeks support for this submission from two decisions of this court.

(2.) IN State of Madras v. Ramulu Naidu ([1965] 16 S. T. C. 865), the assessing authority at the time of making the assessment order under section 12 (2) did not impose any penalty, but later, the succeeding assessing authority levied the penalty on the ground that an order under section 12 (3), which should have been passed at the stage of assessment, had not been passed. This order was objected to by the assessee by filing an appeal before the Appellate Assistant Commissioner, but without success. But the Tribunal set aside the said order levying penalty on the ground that it had been passed without jurisdiction. This court affirmed the said view of the Tribunal expressing that the whole scheme of section 12 suggested that the levy of penalty on the grounds comprehended by sub-section (3) of section 12 is part of the assessment proceedings under sub-section (2), that, therefore, the penalty that is contemplated by sub-section (3) depends on and follows a finding as to the incompleteness or incorrectness of the return submitted and forms part of the proceedings resulting in the best judgment assessment, and that there could be no independent enquiry contemplated by sub-section (3) for purposes of levy of penalty alone. It was, therefore, held in that case that the succeeding assessing authority would have no jurisdiction to reopen an earlier assessment order or act independently of the assessment for purposes of levying penalty.