(Judgment of the Court was delivered by K.RAVIRAJA PANDIAN, J.) The revisions are filed against the order of the Sales Tax Appellate Tribunal, Coimbatore on 10.01.1993 in T.C. (A) No.533 of 1993, which relates to quantum of the liability of tax and T.C. (A) No.601 of 1993, which relates to penalty.
2. The points to be decided in this case are whether the order of the Tribunal confirming the order of the Appellate Authority, who confirmed the addition made by the assessing officer is correct or not and whether the order of the Tribunal in not reducing the penalty more than 50% is correct or not.
3. The assessee is a registered dealer in waste oil. The assessee purchased waste oil from local dealers and also interstate dealers and removed impurities by process by using caustic soda, earth powder, rasanam. The enforcement wing officer inspected the place of the business of the assessee on 07.08.1991 and recovered certain slips. Based on those slips, assessment was made by the assessing officer. The value of the slips with respect to waste oil recovered was worked out to Rs.7,03,500/-. An equal addition was also made and also for the purchase of goods, like lye, earth powder, rasanam were made without purchase bills, locally and were used to remove the impurities in the waste oil. So, purchase tax was was levied and equal addition has also been made in a sum of Rs.10,645/- for probable omission and the total taxable turnover was determined as per the entries contained in the slip and tax was levied by order dated 27.05.1992. Subsequently by separate order dated 07.08.1992, the assessing officer levied penalty under section 12(3), which was challenged before the appellate forum. The assessee filed an appeal against the order made in respect of quantum of tax. The appellate authority rejected the petitioner's contention that there was no taxable sales since the assessee purchased waste oil from the Government company such as Indo Burma Petroleium Company, etc., and removed the impurities and sold it as lubricating oil. The Appellate Assistant Commissioner dismissed the appeal. Aggrieved by that order, the assessee carried the matter on further appeal to the Tribunal. The Tribunal in its order has considered the fact that the department has clearly established the fact of suppression of purchase and sale.
4. On 07.08.1991, the assessee has given a statement to the assessing authority that it did not maintain a separate sale account in respect of local and interstate sale. Likewise, it did not maintain separately account for purchase of goods like lye, earth powder, rasanam. In respect of suppression, the first sale of waste oil, the department relied on D7 records unearthed during the date of inspection on 07.08.1991 and 26.08.1991. The assessee had admitted before the officer concerned about the suppression, which factum was available at page 163 to 173 of the assessment filed. The sale suppression of waste oil was worked out from the slips 29, 39, 49, 52, 56 for the assessment year 1990-91. When confronted with the slips, the assessee has given an unconditional statement that it has not raised any bill in respect of the waste oil, which is shown as items 29, 39, 49, 52, 56 in the slips recovered. It can also be seen from the order of the Tribunal that the assessee has unconditionally accepted that in respect of 468 barrels of RC waste oil, the assessee has not raised any bill and accepted the value of the above quantity of oil roughly at Rs.4,21,200/-. It is further accepted before the inspecting authorities that it did not bring the purchase or sale of the above oil into account. The assessee has itself admitted before the authorities about this suppression of quantity of oil in the bills and account on the basis of the recovered materials, the assessment has been made. For the probability of similar suppression an equal addition has been made. Equal addition so made is also authorised by law, but certain cautionary words have been given by the superior court of jurisdiction, while making assessment. We can usefully refer to the judgment of the Supreme Court in the case of Commissioner of Income Tax v. H.M. Esufali H.M.Abdulali, 32 STC 77, wherein, it was held that so long as the estimate by the assessing officer was not arbitrary and had a reasonable nexus with the facts discovered, it could not be questioned. It was wrong to hold that the officer must have material to prove the exact turnover suppressed. So, is the judgment in the case of A.V.K.Marimuthu Nadar and Bros. v. The State of Tamilnadu, 47 STC 314, wherein a Division Bench of this Court held that the estimation of suppressed turnover on best judgment basis of the assessing officer was just and reasonable. Even if the assessing officer has adopted a different multiple, unless it was found to be so arbitrary and unreasonable, the Court would not interfere. It was not necessary for the assessing officer, in such circumstances, to be in possession of any correct measure to find out the escaped turnover. Hence, the quantum of tax imposed on the assessee is on the basis of the rational exercise power conferred on the authorities, coupled with the admission made by the assessee. To that extent, we are not able to find any irregularity in the order of the Tribunal. Rather, the revision petitioner has not made out any case for interference.
5. In respect of penalty, the assessing officer by separate proceedings, levied penalty in a sum of Rs.1,07,658/- under section 12(3) of the Tamil Nadu General Sales Tax Act, which amounts to 150% of the tax on the suppressed turnover. On appeal, the Appellate Assistant Commissioner has reduced to 100%. On assessee's further appeal before the Tribunal also, the Tribunal granted the relief in respect of penalty, in the sense the order of the Appellate Assistant Commissioner was modified and the rate of penalty was reduced to 50%.
6. The only contention that was raised before the Tribunal was that the original authority who framed the assessment has not suggested for initiation of penalty proceedings. The successor-officer has initiated the proceedings. That contention has rightly been rejected by the Tribunal. The Tribunal has also recorded a finding that when the suppression is wilful and the suppression was proved, even the subsequent authority can levy penalty. By so holding the Tribunal has noted in its order that in the prevailing circumstances, it felt that the quantum of penalty fixed by the lower appellate authority is some what excessive and a reduced penalty at 50% of the tax due to the Government to meet the ends of justice. The penal provision obtaining during 1991-92 vests with the authorities some discretion to impose penalty from 50% to 150%. The discretion in this case has been so generously exercised in favour of the assessee to the lowest level of 50%. When the fact remains that there was suppression and that suppression was established as wilful suppression, we do not find any merit to interfere with the rate of penalty as well.
7. In the light of the reasonings stated above, both the revisions fail and are dismissed. No costs.
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