1. This appeal has been filed against the order of the Board of Revenue dated 29th November, 1975. The assessee reported a total and taxable turnover of Rs. 5,38,360.72 for the assessment year 1964-65 under the Tamil Nadu General Sales Tax Act, 1959, in the annual return submitted on 31st May, 1965. There was an inspection of the assessee's business place on 11th September, 1964, when nine bills disclosing sales to the extent of Rs. 97,547.23 were recovered. This turnover was not disclosed in the return. When the assessee's accounts were checked, the turnover was found to be Rs. 6,35,907.95, which included the sum of Rs. 97,547.23. The assessing officer found that there were other suppressions and irregularities and he therefore rejected the returns as well as the accounts. He took the turnover as per the books and added Rs. 31,795.40, which represented 5 per cent of the turnover, as per the accounts, for 'probable suppression' and made a best judgment assessment under Section 12(2) of the Act. He levied also a penalty of Rs. 7,416 under Section 12(3) for the assessee's failure to disclose the turnover of Rs. 97,547.23 in the annual return.
2. At the time of the inspection, there were certain sheets indicating suppression of purchase amounting to Rs. 65,652.85. Adding 10 per cent towards gross profit, the sales taken as suppressed worked out to Rs. 72,217.85. This sum was originally included in the assessment for 1963-64. On appeal by the assessee, the Sales Tax Appellate Tribunal held that the turnover related only to 1964-65 and not to 1963-64. Therefore, the assessing officer revised the assessment under Section 16(1) and included the said turnover of Rs. 72,217.85 in the assessment for 1964-65 and levied also a penalty of Rs. 5',415 under Section 16(2). The assessee appealed to the Appellate Assistant Commissioner against the original and revised assessments, and the Appellate Assistant Commissioner confirmed the original and the revised assessments. As regards penalty levied under Section 12(3), the Assistant Commissioner held that as the turnover of Rs. 97,547.23 had been accounted for in the accounts, though not included in the annual return, there could be no levy of penalty. He relied, for this purpose, on a decision of this Court in S.G. Jayaraj Nadar & Sons v. State of Madras  21 S.T.C. 180. As regards the penalty of Rs. 5,415 levied under Section 16(2), the Assistant Commissioner held that, as the relative turnover was disclosed before the Tribunal, there was no wilful non-disclosure and therefore he cancelled the penalty levied.
3. The Board considered that the order of the Appellate Assistant Commissioner cancelling the two penalties was not correct and, after giving the assessee the necessary opportunity, it held that this was a clear case of suppression where penalty under 2(3) as well as under Section 16(2) should have been sustained. The order of the Assistant Commissioner was therefore cancelled and the penalty levied by the assessing authority was restored. It is this order which has been brought oh appeal to this Court.
4. We shall deal with the two penalties separately as they have been levied under different provisions. Section 12(3) of the Act provided, before its amendment by Act 31 of 1972, that when making an assessment under Sub-section (2), the assessing authority may also direct the dealer to pay, in addition to the tax assessed, a penalty not exceeding one and a half times the amount of tax due on the turnover that was not disclosed by the dealer in his return. Sub-section (2) applied to cases where no return was submitted by the dealer under Sub-section (1) within the prescribed period or if the return submitted by the dealer appeared to the assessing authority to be incomplete or incorrect. In such cases, the assessing authority could, after making such enquiry as it may consider necessary, assess the dealer to the best of its judgment. In the present case, as already noticed, the assessing authority took the turnover as per the books as shown by the assessment order running as follows:
For the reasons stated above, it was proposed to reject the return filed by the dealers as incorrect and incomplete and to determine the total and taxable turnover for 1964-65 as under:Sales turnover as per accounts Rs. 6,35,907.95ADD 5 per cent suppression Rs. 31,795.40--------------- Total and taxable Rs. 6,67,703.35---------------
5. The question is whether, in a case like this, where the book-turnover as assessed included the sum of Rs. 97,547.23, there is any scope for levying penalty. In S.G. Jayaraj Nadar and Sons v. State of Madras  21 S.T.C. 180, the assessment related to 1961-62. The assessee submitted its return. During the assessment proceedings, it was found that the assessee had not included three items relating to delivery charges, sales of motor parts and sales of firewood. Penalty was levied for the failure to return the relevant amounts. The Appellate Assistant Commissioner considered that the failure would constitute only a technical offence and levied a nominal penalty of Rs. 500. The Board, in exercise of its powers of revision, set aside the order of the Appellate Assistant Commissioner and restored that of the assessing authority. This Court held at page 183:
Where account books are accepted along with the other records, obviously, there can be no room or justification for applying best judgment. Best judgment is applied to find out the correct turnover on estimate and estimate will arise only if the accounts are not accepted, either in whole or in part. Even then best judgment, we may observe in passing, cannot be a wild guess, but a reasonable and justifiable guess based on some material at least.
6. It was observed that the quantum of turnovers in respect of two of the three items were just those based on the account books and, therefore, the assessment in respect of those items could not be regarded as based on best judgment, for no estimate was necessary or made in respect of them. As regards the third item, it was found that it was made in the best of judgment and, therefore, the levy of penalty was found to be justified. It was held that 'the whole of the assessment need not necessarily be only under Sub-section (2) of Section 12 and that it can be partly under Sub-section (1) and partly under Sub-section (2) and, where part of the assessment was not based on estimate or best judgment, it was clearly not within the purview of Sub-section (2) and, therefore, in respect of that part of the assessment, there would be a bar to the levy of penalty under Sub-section (3) of Section 12'. This case was taken up on appeal to the Supreme Court and the judgment of the Supreme Court is reported as State of Madras v. Jayaraj Nadar and Sons  28 S.T.C. 700. The Supreme Court affirmed the judgment of this Court. At page 702, their Lordships also observed:
Where account books are accepted along with other records, there can be no ground for making a best judgment assessment.
7. So, the result is that wherever books of account are accepted as such, there is no question of any levy of penalty under Section 12(3) and, therefore, we consider that the levy of penalty is not called for.
8. No doubt, there is another sum of Rs. 31,795.40 added in the assessment. However, the authorities did not consider that addition as a justification for levy of penalty. We do not think it proper to go into that item for considering the question of penalty.
9. Coming to the levy of penalty under Section 16, the position is as follows. The assessee did not include the relevant amount either in the return for 1963- 64 or for 1964-66. It is true that when the matter was pending on appeal before the Tribunal for the assessment year 1963-64, it was stated by the assessee that this amount was liable to be assessed only in 1964-65 as the dates of the transactions themselves showed. It was only on this basis that the Tribunal directed that the relevant amount could be assessed in 1964-65. As the non-disclosure in the present case cannot be taken to be other than wilful, the levy of penalty under Section 16 cannot be said to be bad. The learned counsel for the appellant contended that there was no finding about a wilful nondisclosure. However, the facts clearly show that there could be no other conclusion possible and, merely because there is no specific statement that there was a wilful non-disclosure, it does not follow that there is no finding to justify the levy of penalty. In fact, the authorities have clearly brought out the circumstances as justifying the levy of penalty. This can be attributed to no other reason than wilful non-disclosure and, therefore, the penalty under Section 16(2) was properly sustained by the Board. The result is that the appeal is partly allowed. There will be no order as to costs.