1. The tax revision case under Section 38 of the Tamil Nadu General Sales Tax Act, 1959, has been filed by the department against the order of the Sales Tax Appellate Tribunal (Additional Bench), Madurai, modifying the order of the Appellate Assistant Commissioner and setting aside the penalty of Rs. 1,368 levied on 'suppressed' turnover of Rs. 68,400 for the year 1963-64.
2. The Joint Commercial Tax Officer II, Virudhunagar, had levied tax on a total taxable turnover determined at Rs. 1,99,309.79 for the year 1963-64. Subsequently, in a raid made on 17th July, 1964, some account books relating to Royal Lorry Booking Office, Virudhunagar, were recovered. In those books, certain entries relating to the assessee, V.U. Panneer Nadar of Virudhunagar, for the transport of goods from Virudhunagar to certain places were found. There were no entries in the books of the assessee corresponding to three entries in the books of Royal Lorry Booking Office for the sale of 1,657 bags of blackgram dhall, 252 bags of broken dhall and 8 bags of blackgram. The taxing officer relied upon the account books of Royal Lorry Booking Office, as having been regularly maintained, and estimated the 'suppression' of sales by the assessee to a total extent of Rs. 1,40,680, being the value of those three items of goods, and levied an additional tax of Rs. 2,813 and also a penalty of Rs. 4,800 under Section 16(2) of the Act.
3. The assessee reported a turnover of Rs. 58,629.79 for the year 1963-64. But the taxing officer added an additional turnover of Rs. 1,40,680 and determined the total taxable turnover of Rs. 1,99,309.79, as mentioned above, and levied a tax of Rs. 3,986.20 at 2 per cent and a penalty of Rs. 4,200. The assessee appealed to the Appellate Assistant Commissioner against the addition of Rs. 1,40,680 to the turnover and the levy of penalty of Rs. 4,200, and also against the further addition of Rs. 1,40,680 to the turnover and the levy of additional tax of Rs. 2,813.39 and the penalty of Rs. 4,800 under Section 16(2). The Appellate Assistant Commissioner set aside the first addition to the turnover, the tax and penalty levied thereon, and fixed the quantum of the second additional turnover as Rs. 68,400 and arrived at the total taxable turnover for the year as Rs. 1,27,029.79 and levied a tax at 2 per cent and a penalty of Rs. 1,368 equal to the tax at 2 per cent on the 'suppressed' turnover of Rs. 68,400 and thus allowed the appeal in part.
4. In the further appeal to the Tribunal, the assessee disputed the turnover of Rs. 8,560 and the levy of penalty of Rs. 1,368. He did not however advance any argument against the assessment. But, on the other hand, he accepted it and confined the appeal only to the penalty. The Tribunal allowed the appeal regarding the penalty and cancelled it on the ground that there is nothing to show either in the preassessment notice or in the order of assessment that the assessee wilfully suppressed the turnover, which escaped assessment, relying upon the following observation of this Court made in Oveekee Textiles v. Deputy Commercial Tax Officer, Tiruchengode  27 S.T.C. 439:
The levy of penalty under Section 16(2) is conditional upon the satisfaction 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 the imposition of penalty under Section 16. Therefore, a penalty levied in the purported exercise of jurisdiction under Section 16 but without the abovesaid finding is unsustainable; but if the penalty is levied while the assessment is made under Section 12 then it is valid and has to be sustained.
5. The taxing officer and the Appellate Assistant Commissioner merely used the word 'suppressed' and the words 'suppressed' and 'suppression' respectively in their orders. Section 16(2) of the Act, under which the penalty was levied, lays down that, in making an assessment under Clause (a) of Sub-section (1) of that section, determining the escaped assessment by the best judgment method, if the assessing authority is satisfied that the escape from assessment is due to wilful non-disclosure of assessable turnover by the assessee, the assessing authority may direct the dealer to pay a penalty not exceeding 1 1/2 times of the tax so assessed in addition to the tax levied on the escaped turnover. A Bench of this Court has observed as follows in State of Tamil Nadu v. Ramachari & Sons  40 S.T.C. 542, which was relied upon by the Learned Counsel for the department:
The question as to whether penalty could be levied in a case where there was only a finding of 'suppression' was the subject-matter of consideration by this Court in a later case than that relied on by the assessee and that is State of Tamil Nadu v. Sri Swamy and Company  39 S.T.C. 85. It was held that the use of the word 'suppression' showed the wilful nature of the non-disclosure; and that, if it had not been wilful non-disclosure, the assessing authority would have used the word 'omission' and that the Tribunal in that particular case was not right in setting aside the penalty on the ground that there was no finding of wilful nondisclosure. In view of the above decision, it follows that when once the word 'suppression' had been used, it is clear that the authorities had given a finding that there was a wilful non-disclosure of a part of the turnover which was brought to tax under Section 16; and the penalty levied, therefore, was proper and the Tribunal was not right in deleting the penalty.
6. But, in a subsequent decision rendered by us on 3rd October, 1977, in State of Tamil Nadu v. S.M. Baba Sahib  44 S.T.C. 299 (T.C. Nos. 317 and 318 of 1974), we have observed as follows:
The Learned Counsel, relying on the decision of this Court reported in State of Tamil Nadu v. Sri Swamy and Company  39 S.T.C. 85, contended that the use of the word 'suppression' would show the wilful nature of the non-disclosure. We are in respectful agreement with this decision. But we would like to add that the mere use of the expression 'suppression' is not enough. A wilful non-disclosure of assessable turnover is a necessary ingredient to make out that part of the section, namely, a deliberate intention to suppress an assessable turnover which should, in fact, have existed. It is not possible to say, merely from the fact that there has been a reassessment of escaped turnover on the basis of best judgment, that there has been a wilful non-disclosure of assessable turnover. There must be something to indicate that the turnover did in fact exist and that the assessee had wilfully not disclosed that assessable turnover.
7. The department has to establish that the assessee had the necessary mens rea before it could be stated that a turnover, which escaped assessment, was wilfully not disclosed by him. Following the decision in Oveekee Textiles v. Deputy Commercial Tax Officer, Tiruchengode  27 S.T.C. 439, and our decision in State of Tamil Nadu v. S.M. Baba Sahib  44 S.T.C. 299 (T.C. Nos. 317 and 318 of 1974), we hold that the Tribunal was justified in setting aside the penalty on the ground that there was no finding that there has been a wilful non-disclosure of assessable turnover.
8. The tax revision case is dismissed, but without costs.