1983 (6) TMI 173 - HC - VAT and Sales Tax

Summary

Issues:
Levy of penalty under section 12(3) based on alleged suppression of turnover by the assessee.

Detailed Analysis:
The case involved a dealer in casting materials who reported a taxable turnover but was found to have deficiencies in stock and discrepancies in accounts during inspections conducted by the authorities. The assessing authority added a sum to the turnover based on slips indicating payments to laborers not accounted for in regular books, estimating suppression of production. A penalty under section 12(3) was also levied. The Appellate Assistant Commissioner partially allowed the appeal, reducing the penalty. The Tribunal upheld the addition and penalty, leading the assessee to challenge only the penalty aspect.

The assessee contended that the penalty should not have been levied as suppressions were not proven, arguing that the mere rejection of the explanation regarding the slips should not automatically imply guilt of suppression. Reference was made to a previous case where it was held that penalty cannot be imposed solely based on a best judgment assessment without concrete evidence of turnover suppression. However, the court distinguished the current case, emphasizing that the dealer's status was not in dispute, stock deficiencies were repeatedly found, and labor payments indicated production activities. The authorities rejected the explanation that the slips belonged to someone else, leading to the sustained estimate of suppressions.

The court concluded that section 12(3) could be invoked in this case due to the dealer's status, findings of stock deficiencies, and unaccepted explanations regarding the slips. As the Tribunal's decision was based on these factors and there was no reason to interfere, the court dismissed the tax case, upholding the penalty under section 12(3) for the alleged suppression of turnover.