Ramaprasada Rao, J.
1. In this batch of writ petitions common questions of law arise. It was agreed that it is sufficient to notice the facts in Writ Petition No. 1322 of 1966, as the relevant facts in the other cases are similar to those stated in Writ Petition No. 1322 of 1966. Mr. Srinivasan addressed arguments and it was conceded that the said arguments may be adopted as common arguments, as common contentions arise in the other writ petitions as well. We shall, however, refer to certain peculiar features in some amongst the petitions before us in the course of our judgment.
2. The facts in Writ Petition No. 1322 of 1966 were as follows: The petitioners, a partnership firm, were doing business in textiles, mostly art silk and handloom goods. The petitioners are both importers and exporters. In connection with certain exports made by them they were able to secure certain import licences, which enabled them to import art silk. It is common ground that such art silk yarn imported was to be used and utilised by the petitioners in the course of their trade and manufacture of handloom cloth and that they were prohibited from selling such art silk yarn so imported. For the year ending 31st March, 1961, the petitioners filed their returns voluntarily and produced their accounts to the assessing authority and got themselves assessed in the usual way. But it should be noted that their first stand before the original assessing authority was that they imported art silk yarn and that they stocked the goods in their respective places of business within the State of Tamil Nadu and that they utilised them for the manufacture of handloom cloth. It was on this basis that the return was filed and in substantiation thereto the account books were also shown to the assessing authority, and finally the petitioners obtained exemp tion, to which they were entitled under the provisions of the Madras General Sales Tax Act, 1959. That the assessment was based on such representations and documentary evidence is not denied. Later it transpired that the petitioners-firm was raided by the Special Police Establishment, Madras, and in the course of such raid certain records were recovered from them. The Commercial Tax Officer, Salem, and the Deputy Commercial Tax Officer, Tiruchengode, perused the said records in the office of the Superintendent of Police, Economic and Offences Wing, Madras, as also certain statements made by the petitioners before the Commissioner of Income-tax, Central Division, Madras. On such a perusal of the records as above it was found that the petitioners did not utilise the imported art silk yarn for manufacture of handloom cloth in their factory but made a different use of them, which conduct and attitude would not entitle them to the exemption originally granted by the assessing authority. In those circumstances the respondent issued a notice dated 15th September, 1965, and made a proposal to redetermine the total taxable turnover of the petitioners-firm for the assessment year 1960-61. In and by this notice the petitioners were given an opportunity to file their objections as also to appear in person with the relevant records at the office of the respondent on or before a notified date. From time to time the petitioners sought adjournments for filing objections and in particular the petitioners desired that the materials said to have been gathered in the office of the Superintendent of Police might be furnished to the petitioners to enable them to show cause to the memo, issued. As the petitioners were not in possession of the exact copy of the details secured by the police, the petitioners were informed that special arrangements were made for the petitioners to peruse the books and the other materials secured by the police and they were particularly asked to appear on 9th December, 1965, at the office of the Superintendent of Police and peruse the said records. The petitioners' case is that though their Advocate and their representative tried to inspect the records and the other materials in the manner suggested by the respondent, it was not possible to secure full information. In that behalf the petitioners wanted an oppor tunity for a fuller examination of the relevant records. The petitioners' grievance is that no such opportunity was given to them.
3. The respondent's case, however, is that the petitioners did not avail themselves of the opportunity available to them and that at no time the petitioners produced any account books or acceptable material to prove that the imported goods were not sold but were used for the manufacture of handloom cloth by the petitioners. In the course of the memos. issued from time to time the respondent made it clear that, if no proper explanation was forthcoming, a penalty in accordance with law would be levied, since a good portion of the taxable turnover had escaped assessment due to the intentional non-disclosure of relevant circumstances relating to such turnover by the petitioners. The petitioners not having explained at all in spite of the opportunities given and not having discharged the onus, which lay heavily upon them, the respondent had to conclude that the petitioners only resold the goods in the market. Consequentially the respondent passed a revised assessment order, in which he confirmed the proposals earlier made, and after reassessing the petitioners by withdrawing the exemption irregularly granted, determined the turnover, reckoned the tax and also levied the penalty under Section 12(3) of the Act. Such penalty was levied as the petitioners did not disclose the sale of the yarn in the return originally submitted by them.
4. The petitioners' case is that no effective opportunity was given to them to establish their case and that the opportunity, if any, given to them by the respondent to inspect the accounts and the relevant material in the office of the Special Police Establishment is illusory and therefore there has been a failure of the principles of natural justice. It is the case of the petitioners that the respondent should have a gist of the material secured by the police as also the information on which he based his opinion to revise the closed assessment. One other contention of the petitioners is that any disclosure made by the petitioners to the Income-tax Commissioner was protected under Section 68(8)(a) of the Finance Act, 1965, and such a con fidential information being statutorily inadmissible no reliance can be placed upon it by the respondent. The contention is that the respondent has erred in law in placing the onus of proof on the petitioners in respect of the reopened proceedings, and in any event the penalty, which has been levied under Section 12(3), which section is inoperative and inapplicable to the facts and circumstances of the case, is unauthorised and illegal.
5. Contending contra the respondent's case is that an adequate opportunity was given to the petitioners to submit their objections. In fact the respond ent did not have any copies of the materials, which the police secured. On the other hand, they could only instruct themselves from the records obtained by the police and the gist of such information was passed onto the petitioners. It is claimed that in order to enable the petitioners to prepare their objections special arrangements were made for them to peruse the records, which were with the Superintendent of Police. It was the petitioners who failed to avail themselves of the said opportunity. The respondent states that the allegation that the petitioners were not in a position to examine the complicated accounts in the office of the Superin tendent of Police, which accounts related only to the business transactions, is an afterthought and made with ulterior motives. From time to time it was made clear that action was being taken on the pieces of materials secured by the respondent from the office of the Superintendent of Police, of which no written report was available with the respondent. The respondent, therefore, denies that no effective opportunity was given to the petitioners. Regarding the confidential nature of the voluntary disclosures made by the petitioners to the Commissioner of Income-tax the respondent's case is that it does not strictly arise, because the respondent wanted to bring to tax the escaped turnover, and, as the petitioners failed to prove that the goods imported were utilised for the manufacture of handloom cloth and as the proposal was based on information secured by the respondent from both the police department and the income-tax department, the proposal and ultimate levy of tax and penalty are justified. The petitioners never attempted to prove with reference to any acceptable data that they did not sell the whole or part of the goods at Madras. Their belated case that they have sold the licences, which were highly inconsistent with their original stand, was not even established. In any event the respondent states that, as the onus of proving that the transactions are without the taxing provi sions of the Madras General Sales Tax Act is on the petitioners, the conten tion of the petitioners to the contrary is untenable. The respondent concedes that the provision of law has been incorrectly noted in the final order as Section 12(3), whereas it is claimed that the penalty was levied under Section 16(2) of the Act. The mere misquoting of the correct provisions of law would not invalidate the proceeding. Thus the respondent's case is that the reopening of the assessment was made in the circumstances, which are justified both under the provisions of the statute and under the general law, and that an effective opportunity was given to the petitioners, and that the petitioners having failed to discharge their burden of proof the impugned order is well founded and rendered within the jurisdiction of the assessing authority.
6. The relevant facts in the other writ petitions are admitted to be similar excepting for the dates of the impugned orders.
7. We shall proceed to consider seriatim the relative contentions of the parties.
8. We shall first dispose of the argument that, as the impugned order specifically mentions the statutory provision as Section 12(3) and as the said provision cannot be invoked in the instant case the order in so far as it related to the imposition of penalty is illegal. The learned counsel for the respondent pointed out that in the text and colour of Sections 12 and 16 there are distinctions, which primarily distinguish the scope and content of the statutory authority or the tribunals in the matter of levy of penalty. No doubt a certain hypothesis is projected under Section 12(2) of the Act, which would enable the assessing authority to assess the dealer to the best of its judgment and also direct the dealer to pay in addition to the tax assessed a penalty. But under Section 16 the content of authority on the assessing officer is wider ; whereas in Section 12(2), which postulates a case where no return has been submitted by the dealer as prescribed or if an incorrect or incomplete return is made by him, the best judgment formula and the consequential imposition of penalty are attracted, under Section 16, if the assessing authority is satisfied that if for any reason the whole or any part of the turnover of a business of a dealer has escaped assessment to tax, it may determine the escaped turnover to the best of its judgment. While exercising such jurisdiction under Section 16, if the assessing authority is satisfied that the escape from assessment is due to wilful non-disclosure of the assessable turnover by the dealer, then it has the authority to impose a penalty as prescribed in addition to the tax assessed. There is a certain amount of overlapping in the content of both the sections but the power under Section 16 is wider than that under Section 12(2). Except the prescrip tion as to the period of limitation set out in Section 16(1)(a) it appears to us that the power of the assessing authority under Section 16(1)(a) is wide enough so as to cover a case which may literally come under Section 12(2) as well. But it is argued that the jurisdiction under Section 16 depends on a jurisdictional fact, namely the initial discovery of any reason by the assessing authority that the whole or any part of the turnover of the business of a dealer has escaped assessment to tax. This may be so, but the distinction sought to be made out is without any difference. So long as the power is given to the assessing authority to reopen the assessment for any reason, which, though apparently subjective, should withstand the test of objectiveness as well, it cannot be said that the power exercised under Section 12 or under Section 16, in so far as the imposition of penalty is concerned is deeply divergent or irreconcilably different. It cannot be said that if the assessing authority quotes or misquotes one or the other of the above two sections while imposing the penalty, the order itself is vitiated, erroneous and ineffective in the eye of law.
9. Both Sections 12 and 16 of the Madras General Sales Tax Act, 1959, are illustrative of the labyrinth of power, statutorily vested in the assessing officer for which he can make exits in different paths under different circumstances. Under Section 12 if a return filed by the assessee is either incomplete or incorrect or where there is no return at all, then the assessing authority can deal with the situation and assess in accordance with its best judgment. Under Section 16, if for any reason the taxable turnover has escaped assessment, the assessing authority can in exercise of its powers under that section bring to tax such escaped turnover besides levy ing a penalty, if it is attributable to wilful non-disclosure. Section 16 appears to be a residuary section empowering the concerned authority to assess to the best of its judgment. But it is undeniable that both Sections 12 and 16 deal with the power of the authority to assess to its best of judgment and impose a penalty according to the circumstances appearing in a given problem. In the ultimate analysis, if the power of the authority to bring to tax the escaped turnover, which escape may be for any reason whatso ever is indisputable, and if the power to levy penalty also follows, then the consequential rights to enforce such power might assume protean shapes. Under the Madras General Sales Tax Act such ways and shapes are reflected in Sections 12 and 16. Both the sections provide the machinery for the same purpose and vest the authority with the requisite power to act. If the import of Sections 12 and 16 is thus understood, then the authority is not tied down to a particular section, if it notices the escapement of tax as is ordinarily understood. If an authority has the necessary power and particularly statutory power to deal with the subject and pass necessary orders which is only a faculty to decide legally, justly and truly, then an erroneous invitation to or quotation of a wrong provision of law in the notice whereunder the proceedings are initiated does not matter at all. It is the substance that matters and not the form. The power to levy a penalty has in certain circumstances to be understood in the same light as above. Of course, this is subject to the data indicated in either of these sections for levying such penalty. If the assessee has correctly understood the true purport of the notice, then it provides another guideline to sustain the action of the authority as being well within its power. Thus we are of the view that the assessing authority cannot possibly be tied down to the quotation which he mentions in the notice. As pointed out by a Bench of this court in M.S. Mariappa Nadar v. State of Madras  11 S.T.C. 215, even a wrong reference to a statutory provision may not invalidate an order, if the authority had the requisite power to pass that order, that is the jurisdic tion in the exercise of which it could pass such an order. We are therefore unable to agree with the learned counsel for the petitioners that the impugned order suffers from any infirmity in the eye of law on the only ground that instead of referring to Section 16 of the Madras General Sales Tax Act it has referred to Section 12(3) therein.
10. The conduct of the petitioners can now be noticed. They themselves voluntarily submitted their returns for the assessment year in question and held out that the imported yarn was utilised by them in the course of manufacture of handloom cloth. It is on this specific representation that they gained exemption and the relative turnover was exempted from tax. But when the impugned notice was given, their case was that the revenue should prove that there was a sale of the imported yarn and in the absence of such proof the action proposed and ultimately confirmed is illegal. Before us it is sought to be made out that all the licences were sold in specie and no goods were brought to the place of manufacture of the petitioners and all dealings were in Bombay, whether it related to the sale of the licence or importation of the goods under cover of such a licence and that therefore no cause of action has arisen in the State of Madras, which would enable the respondent to review the situation, even if such an action was called for. Thus, therefore, the inconsistent stands taken by the petitioners are primarily reflective of their culpable conduct. Originally they confessed that the goods were in the State of Madras and they were dealt with by them and used by them in the course of manufacture of handloom cloth. At the next stage they would pretend that nothing was sold by them but would call upon the revenue to prove the same. At the third and final stage they would say that in connection with the import licences no goods were imported and brought into the State of Tamil Nadu at any time and all such importations were effected in the State of Bombay or at some other place outside the State of Tamil Nadu. Such conduct obviously implies that the account books produced by the assessee in the first instance contained untrue and false information ; that the returns submitted by them, on which they secured the exemption, were incorrect and there was a wilful non disclosure of correct facts. It is in such circumstances that the contentions of the learned counsel for the petitioners that there was no adequate opportunity and even if that opportunity was adequate, the action was illegal have to be considered.
11. It is common ground that the assessing authority attempted to reopen the closed assessment on the foot of a supervening, culpable and incrimi nating material secured by the police department and the income-tax department. It is not as if such material with the police or the voluntary confession made by the petitioners before the Commissioner of Income-tax was the bed-rock of action. Such information and material served the purpose collaterally. The information which the assessing authority obtained was sufficient reason for it to hold prima facie that a part of the turnover of the business of the dealer has escaped assessment to tax. The case of the petitioners that the goods were utilised by them in their manufacture of handloom cloth has been found to be hopelessly untrue. This is sufficient to subjectively prompt the assessing authority to take action against the delinquent assessee on the basis that it has reason to believe that a part of the turnover has escaped assessment. It is not disputed before us that if the yarn imported is not utilised in the course of manufacture of handloom cloth by the petitioners, then the petitioners would not be entitled to the exemption claimed and granted to them by the original assessing authority. If this were true, then there was sufficient reason for the assessing authority to act under Section 16. The point that is made out by the assessee is that the police reports were not made available to them and no reliance can be placed upon their confessional statement before the Income-tax Officer. This would be begging the question for the action taken by the assessing authority was based on information. The respondent in the counter-affidavit states that he had no copies of the reports of the police. The respondent would only state that certain confes sional statements are said to have been made before the Commissioner of Income-tax, but in the counter-affidavit he makes it clear whether such voluntary disclosures can be utilised or not does not arise, because the petitioners were only asked to prove that the goods they imported were utilised in accordance with the prescriptions in the licence and they did not choose to do so. We are not therefore impressed with the general conten tion that the assessing officer having referred to the reports of the police and to the confessions made by the petitioners to the Income-tax Officer he should be pinned down to the information contained in such reports or confessions and in the absence of an open disclosure of such reports or confessional statements no action can be taken by the respondent. As we reiterated, Section 16 is wide enough and indeed residuary in scope so as to bring to tax the escaped assessable turnover which for any reason has escaped from being assessed in accordance with the law. The references to police reports and the statement before the Commissioner of Income-tax are all superficial references but they are not the foundation for the action by the assessing authority. The basis of the action is the entertainment of a doubt on the part of the assessing authority that a part of the turnover, which was not entitled to the benefit of exemption, was wrongly granted such exemption and thus such a part of the turnover has escaped assessment. In our view it is not necessary, and indeed in this case it was impracticable for the assessing authority to furnish copies of such reports with the police, since they did not have the reports themselves. We are not convinced that action was taken by the assessing authority relying upon the police reports or the confessional statement. The entire action is founded upon a reasonable apprehension that the assessee snatched an order in the first instance and gained an exemption to which he was not entitled to. He was benefited therefrom, because a part of the turnover escaped assessment. It is well settled that if the reason of the assessing authority to reopen a closed assessment is based upon a reasonable apprehension, then it is not justiciable. A fortiori it is so in the instant case when the petitioners were taking inconsistent and irreconcilable stands in their explanations. They originally maintained that the goods were brought to Madras and utilised by them. Later they would pretend that the goods were never brought to Madras and utilised by them, and that licences were sold in a place outside the State of Madras. In such circumstances it is very reason able for the assessing authority to expect that a part of the turnover has escaped assessment to tax. It may be that he was prompted to do so by reason of the supervening raid by the police and the confessions made by him to the income-tax department. The burden of proof of establishing that any dealer or any of his transactions is not liable to tax under the Madras General Sales Tax Act lies on the dealer. Section 10 of the Act provides for it. Even the Supreme Court has approved the intendment and the purport of this provision in State of Madras v. V.P.S.A. Narayana Nadar and Company  21 S.T.C. 25 . The petitioners having failed to discharge the onus of proof statutorily enjoined on them, cannot complain that there was absence of jurisdiction on the part of the assessing authority to reopen and revise the assessments, though they were all concluded earlier.
12. Regarding the charge of lack of opportunity, we have no hesitancy in rejecting it as utterly unsupportable. The assessing authority gave the petitioners every opportunity at every material point of time. At one time the assessing authority offered to assist the petitioners to obtain inspection of the records with the police. This was not taken advantage of. At another time, the assessing officer wanted the petitioners to produce their accounts to satisfy him that the later inconsistent contention of the petitioners that the goods were not sold in the (State of Tamil Nadu was correct and that their account books would reflect such a situation. The petitioners did not produce such account books, nor did they submit any other acceptable evidence aliunde to substantiate their case that the goods were not sold. In fact, the assessees completely disowned the account books produced by them in the first instance, as, according to them, they contained wrong and incorrect information. The account books produced by them initially and the returns submitted by them, on the basis of which the original assessments were made, were apparently created for the purpose of gaining the exemption. This is so because the petitioners gave up their case that the goods imported by them under cover of their licences were used by them in the manufacture of handloom cloth. Again their case before us, as already stated, is that they have sold the licences or imported the goods on the strength of such licences at Bombay and dealt with them at Bombay. This is their very version and this also they failed to establish. There is therefore no substance in the contention that no adequate opportu nity was given by the assessing authority to the petitioners. The citations made by the learned counsel for the petitioners do not help him. In Murali Trading Co. v. Joint Commercial Tax Officer'  19 S.T.C. 221 it was practically con ceded by the Government that the rule of audi alterant pattern was not substantially observed. The case in Devji Gokuldas v. Sales Tax Officer  19 S.T.C. 121 proceeded on the basis that the assessing officer had no authority to retain the account books when they were demanded by the assessee for perusal and for furnishing his explanation, as the original seizure of the account books was not in accordance with Section 17(2A) of the Kerala General Sales Tax Act, 1125. It was primarily for the above reason that the learned Judge of the Kerala High Court thought that there was a denial of opportunity to the assessee therein. No such peculiar circumstances dealt with by the learned Judges in the above two cases are present in the cases before us and they are not even stated to be so. The petitioners were obliged to show how the goods were dealt with by them. Goods cannot disappear without disposal. It is to get over this that the belated pleas of sale of licences and importation at Bombay were set up. Even these contentions stand as bare submissions. We are not therefore convinced that no adquate opportunity was given by the assessing authority to the petitioners and that in consequence there has been a violation of the principles of natural justice in all these cases.
13. The next point urged is about the levy of penalty. We have noticed the salient distinctions between Sections 12 and 16 of the Madras General Sales Tax Act. In the matter of levy of penalty a marked difference between the sections is there. Under Section 12(3), the assessing authority, while making an assessment sunder Sub-section (2) of Section 12, may also direct the dealer to pay, in addition to the tax assessed, a penalty. Section 16(2) provides as follows:
In making an assessment under Clause (a) of Sub-section (1) 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 under Clause (a) of Sub-section (1), a penalty not exceeding one and a half times the tax so assessed: Provided that no penalty under Sub-section (2) shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition.
14. The levy of penalty under Section 16(2) is conditional upon the satis faction of the authority that the escapement of turnover was the result of an overt culpable act on the part of the assessee. Such satisfaction though strictly appearing to be referable to the mental satisfaction of the assessing authority, yet a finding to that effect is the sine qua non for imposition of penalty under Section 16. Such a finding should support the conclusion that there has been a wilful non-disclosure of assessable turnover or wilful default in not making a return or in making an incorrect return--see T.P. Sokkalal Ramsait Factory Private Limited v. Deputy Commercial Tax Officer  20 S.T.C. 419. Therefore, in cases where penalty was levied in the purported exercise of jurisdiction under Section 16, but without a finding as indicated, then such a levy is unsustainable. But if the penalty has been levied while the assessment was made under Section 12 of the Act, then it is valid and has to be sustained. In so far as the quantum of penalty is concerned, we are not inclined to interfere in the exercise of our jurisdiction under Article 226 of the Constitution of India.
15. These petitions will, however, be posted for orders to ascertain whether penalty was imposed in exercise of jurisdiction under Section 12 or under Section 16, and for us to pass necessary orders in each of the writ petitions after noticing certain peculiar facts in some of them.