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TMI Blog2008 (12) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... see's accounts were called for and it was found that the return filed by the assessee was incorrect and incomplete and therefore, to the turnover, 15 per cent was added towards freight and unloading charges and 25 per cent was added towards gross profit and thus taxable turnover was determined. The assessing officer, thereupon, proceeded to levy penalty under section 12(5) of the Act. On appeal, the Appellate Assistant Commissioner found that when the assessment is a best judgment one, penalty under section 12(5)(iii) of the Act cannot be levied and it can be levied only when the assessment is under section 12(4) of the Act and the appeal preferred was partly dismissed and partly allowed. Against that, the Revenue filed an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in sub-sections (1), (2) and (3), the assessing authority may, if it is satisfied that the accounts maintained by a dealer are correct, assess such dealer on the basis of such accounts, if such dealer has- (i) failed to submit the prescribed return; or (ii) failed to submit the prescribed return within such period as may be prescribed; or (iii) if the return submitted is found to be incorrect or incomplete." In Devendran and Company v. State of Tamil Nadu [1983] 53 STC 229 (Mad), the assessee submitted a return and the assessing authority, after the check of the books of account, found that the assessee had failed to disclose a huge turnover in the A2 returns, though it found its place in the accounts. The matter was taken up in app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 12 covers a different situation and is intended to apply to a case where there is discrepancy between the returns submitted, which are found to be incorrect or incomplete, and the entries made in the accounts which are found to be correct." In State of Madras v. S.G. Jayaraj Nadar & Sons [1971] 28 STC 700, the Supreme Court held that penalty can be levied under section 12(3) of the Madras General Sales Tax Act, 1959, on the ground that the dealer has submitted an incomplete and incorrect return only if the assessment had to be made to the best of his judgment by the assessing authority. In that case, the assessing authority found that the assessee had failed to maintain separate accounts and as it was not possible to separate the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial and the circumstances of each case: (see State of Kerala v. C. Velukutty [1966] 17 STC 465 (SC)). Where account books are accepted along with other records there can be no ground for making a best judgment assessment." It is explained in Devendran and Company v. State of Tamil Nadu [1983] 53 STC 229 (Mad) that section 12(4) of the Act will come into play only when the return filed by the assessee, which is found to be incorrect or incomplete, is inconsistent with the entries found in the accounts, which are accepted as correct. In the present case, the accounts filed by the assessee were not accepted and that is why, the assessing authority made an assessment to the best of its judgment, which is what the Appellate Assistant Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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