9911796707
TMI Blog1978 (4) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 a 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed. When this part of the section comes into operation, there can be no question of any turnover not being disclosed. Dealing with this last submission, we would like to point out that, when no return has been filed, there will be no turnover disclosed and, therefore, the turnover fixed can be taken to be the turnover not disclosed. So, we see no difference between the first part of sub-section (3) of section 12 and the latter part of that sub-section. The question then is whether, in all cases of an estimate under section 12(2) of the Act, the authority would be justified in imposing penalty under section 12(3) of the Act. Counsel for the petitioners relied on a number of decisions of this court in support of the submission that, when an estimate is made on the amount of turnover not disclosed, no penalty could be imposed. The wording of section 12(3) was compared with the wording of section 16(2). Section 16(2) provided that the assessing authority may, if it is satisfied that the escape from assessment is due to wilful non-disclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed, a penalty not exceeding one and a half times ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such turnover. As a matter of fact, section 12(3) of the Tamil Nadu General Sales Tax Act, which empowers the assessing authority to levy penalty in cases of this kind, does not make it a condition that the assessee should have the necessary mens rea before he is found guilty of making certain suppressions. In our view, the imposition of penalty in this case cannot legally be taken exception to." The matter was again dealt with by this court in Rajam Textiles v. State of Tamil Nadu[1977] 39 S.T.C. 124. There is a more exhaustive review of the case-law and the view has been taken that wilful non-disclosure is not essential for invoking the power of imposition of penalty under section 12(3). The assessee in that case relied on the decision in A.V. Meiyappan v. Commissioner of Commercial Taxes[1967] 20 S.T.C. 115., where it had been held that, though a power to impose penalty for non-disclosure was conferred on the assessing authority, it should not be imposed as a routine matter and that it should be exercised with proper judicial discretion. The court, however, observed, that this decision could not be taken as an authority for the position that a factual wilful non-disclosure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unnecessary to labour this point further, because the matter has been dealt with in detail by the Supreme Court in Commissioner of Income-tax, West Bengal v. Anwar Ali[1970] 76 I.T.R. 696 (S.C.). The Supreme Court ruled that the mere fact that the assessing authority, in assessing a person, was satisfied that the return filed by the assessee did not disclose his correct income, and proceeded to make a best judgment assessment, and assessed him on that basis, would not by itself lead to the conclusion that the assessee had concealed the particulars of his income or had furnished inaccurate particulars thereof, in order to attract section 271(1)(c) of the Income-tax Act, 1961. Though the word "concealed" is not used in section 12(3), nor the words "furnished inaccurate particulars thereof", it would not materially alter the situation. Penalty is for not disclosing. In order that it may be said that there was non-disclosure, it has first to be found that there was turnover or income to disclose. If the existence of the turnover or income is based on the fact that the assessee has not been able to establish the case that he pleaded, that by itself would not prove the positive that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mere fact that some item of turnover has failed to be included in the return would appear to confer upon the assessing authority the jurisdiction to impose a penalty. It seems to us that even in the case covered by section 12(3) of the Act, a deliberate non-disclosure is really contemplated. The section refers to the imposition as a penalty and a penal provision of this nature cannot have been intended to apply to cases other than where a deliberate concealment by non-disclosure is involved. But, on the question, whether such a provision is unconstitutional, we are unable to agree with the learned counsel. It is well-recognised that a power to penalise evasion of tax which is lawfully due is ancillary to the taxing power and the provision cannot therefore be struck down. On the further part of the argument of the learned counsel that mere non-disclosure cannot invite the levy of penalty, we agree. Having regard to the underlying intent of the section, it is still necessary for the assessing authority to be satisfied that the non-disclosure is wilful and is designed to evade the tax. It can hardly be that the legislature thought that an innocent omission by oversight or some such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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