1. The respondent herein is a dealer in firewood and he submitted a return showing taxable turnover of Rs. 1,36,257.99 for the assessment year 1961-62. But, before the final assessment could be made, there was an inspection of his place of business, as a result of which certain anamath account books were recovered. Based on the entries in the said anamath accounts, the assessing officer rejected the account books of the respondent and determined, to the best of his judgment, the taxable turnover to be at Rs. 2,37,548.48, thereby making an addition of Rs. 1,01,290.49 to the returned turnover. At the time of making that assessment, the assessing officer did not invoke his power under Section 12(3) of the Madras General Sales Tax Act for levying a penalty for submission of an incorrect and false return.
2. The order of the assessing authority was later revised by the Deputy Commissioner by enhancing the taxable turnover of the respondent to Rs. 3,00,000 and this resulted in an addition of Rs. 1,63,742.01 to the turnover returned by the respondent. The enhancement made by the Deputy Commissioner was based on a revised estimate made by him on the basis of the same material which was before the assessing authority. The Deputy Commissioner, as a part of his revisional order, levied a penalty of Rs. 2,100, in exercise of the power under Section 12(3) of the Act. The assessee, thereupon, filed an appeal before the Sales Tax Appellate Tribunal questioning the addition made by the revising authority, as also the levy of penalty. The Tribunal went into the merits of the assessment and on the materials it upheld the estimate of the taxable turnover made by the Deputy Commissioner. Tint, the Tribunal has chosen to set aside the order of the Deputy Commissioner levying penalty on the ground that, while the assessing authority has not chosen to exercise the power under Section 12(3), the Deputy Commissioner cannot exercise the said power in exercise of his revisional jurisdiction. That view of the Tribunal has been challenged here by the State. Therefore, the only question that arises in this case is as to whether the Deputy Commissioner, while exercising revisional jurisdiction under Section 32 of the Madras General Sales Tax Act, 1959, can invoke the power under Section 12(3) for the first time.
3. Section 12(3) of the Act empowers the assessing authority to levy a penalty when making any assessment under Sub-section (2). In this case, the assessing officer, while making an assessment order under Section 12(2), has not invoked the power under Sub-section (3). Even in the pre-assessment notice, he has not proposed to exercise the power under Section 12(3). It is in those circumstances, the Deputy Commissioner has chosen to exercise the power under Section 12(3) while exercising his revisional jurisdiction under Section 32.
4. Dealing with the scope of Section 12(3) of the Act, this court in State of Madras v. Ramulu Naidu  16 S.T.C. 865, expressed that where an officer, at the time of making an assessment order, was silent about imposition of penalty, it must be taken that the assessing authority had applied its mind and did not think it necessary to levy a penalty and that the same assessing authority or the succeeding assessing authority would have no jurisdiction to reopen the earlier assessment order for the purpose of levying penalty. This decision was considered in a later decision in M. Ramaswamy Pilial v. State of Madras  22 S.T.C. 224 and distinguished. In that case, the assessing authority, in his pre-assessment notice, had specifically proposed to levy a penalty. After receiving the objections from the assessee, he passed an assessment order, but did not express his views on the question of penalty. The question arose whether a revisional authority such as the Deputy Commissioner, while revising the order of the assessing authority, could impose the penalty contemplated under Section 12(3). The court, in that case, took the view that the fact that the assessing authority having issued a pre-assessment notice proposing to levy a penalty but, after receipt of the objection from the assessee, did not actually levy the penalty in the course of the assessment proceedings, showed that there was an implied finding that there was no case for the levy of penalty and that such implied finding can be interfered with by the Deputy Commissioner in revisional proceedings. This decision has very strongly been relied on by the revenue before us. But we are afraid that the principle laid down in that case cannot apply to the facts of this case. Here, as already stated, the assessing authority did not propose to invoke the power under Section 12(3) at any stage, either before or at the stage of the assessment and there is no question of any inferential finding of the assessing authority on the question of penalty so as to enable the Deputy Commissioner to interfere with such a finding. In a recent decision in Abdul Waheed v. Commissioner of Commercial Taxes  30 S.T.C. 277, it has been held that the revisional authority cannot direct the assessing authority to exercise the power nder Section 12(3),which he has failed to exercise before and cannot, for that purpose, set aside the assessment which is otherwise found to be valid. In yet another decision in East India Corporation Limited v. Assistant Commercial Tax Officer, Madurai (Tax Case No. 195 of 1966) Since reported at  31 S.T.C.330, while considering the scope of the revisional jurisdiction of the Deputy Commissioner under Section 32, this court has expressed the view that the revisional authority can exercise its power only in relation to an order passed by the assessing authority and that it cannot itself exercise the powers of the assessing authority under the relative Sections. Having regard to the fact that there has been no order of the assessing authority nor a proposal to invoke the power nder Section 12(3) relating to the question of penalty, the Deputy Commissioner cannot, independently, invoke the power under Section 12(3) and seek to levy a penalty in this case. The order of the Tribunal is, therefore, upheld and the tax revision case is dismissed with costs. Counsel's fee Rs. 150.