JUDGMENT
Kanakaraj, J.
1. The respondent did not file a return in form A-1 under the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called “the Act”) for the assessment year 1972-73. When summoned to produce the accounts, he did not respond. By an order dated August 22, 1977, he was assessed on a total and taxable turnover of Rs. 8,11,804.75. While the first appeal against the order was dismissed, a second appeal to the Tribunal resulted in a remand order, mainly for the purpose of affording an opportunity to the respondent to produce their accounts. However, when a notice was issued by the assessing authority, after remand, the assessee neither produced his accounts nor cared to make a representation. The shop of the assessee had been inspected on October 17, 1972 by the Assistant Commercial Tax Officer. The Intelligence Wing Officer inspected both his shop and residence on May 29, 1972 and recovered certain account books and slips. There were also a stock of six imported watches and 31 watch straps. It was thus clear that the assessee was dealing in watches. From the account books and the records seized from the place it was found that there was sale of watches to the tune of Rs. 7,65,928 from April 1, 1972 to May 25, 1972.
2. There was clear attempt to suppress the sale of watches by recording only abbreviations and using a sort of coded language. For instance the following entries were explained to mean the correct facts as noted in the right hand side column :
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Abbreviation or Real meaning code language ------------------------------------------------------------------------ C.G. (2) 3.00 Two camy gold watches at Rs. 300 Tre St (1) 1.10 One tressed steel watch at Rs. 110 R.S. (2) 2.20 Two rice square watches at Rs. 220 ------------------------------------------------------------------------
3. Similarly the expenses were also in a sort of code language. It was also found that the entire transactions had not been accounted for in the regular books. The suppression was worked out at Rs. 7,65,928 taxable at 15 per cent. It was therefore proposed to resort to best of judgment and impose a penalty at 1 1/2 times the tax due on the actual suppression of Rs. 7,65,928. A notice was issued inviting objections. The assessee did not respond again. The assessing authority confirmed his proposal in his order dated January 23, 1981. The appeal to the Appellate Assistant Commissioner failed. Regarding levy of penalty, with which we are concerned in this revision, the appellate authority recorded a finding as follows :
“In this case the turnover has not been disclosed both in the returns and also in the accounts and the assessment has been made on best judgment basis. The levy of penalty is therefore called for. I therefore find on the facts and in the circumstances of the case, that the assessing officer is justified in levying penalty at the maximum rate. I sustain the penalty levied.”
4. On second appeal the Tribunal confirmed the best judgment assessment with the following finding :
“We are therefore satisfied that such other receipts also should have related to the sale proceeds of the watches as stated earlier. Further, admittedly the appellant was dealing in plastic goods and ladies bags, the books of accounts, relating to the fancy goods and plastic goods, etc., were not produced before the department. In their absence the assessing officer came to the conclusion that the turnover relating to the fancy goods, etc., would be the same as in the previous year. Having regard to the facts and circumstances of the case, we find that the assessing officer was justified in coming to the above conclusion and as for the quantum, we confirm the assessment made by the assessing officer.”
5. The Tribunal, however, deleted the entire penalty of Rs. 1,72,334. For what follows, the Tribunal was not justified in doing so. We have already noticed the factual findings of the lower authorities. The Tribunal says that the books seized were not rejected, as incorrect and incomplete. The Tribunal also says that the records seized were not anamath (unauthorised) records. The above findings are contradictory to its own earlier finding quoted supra. If a dealer makes entries in a coded language and the same has to be decoded with his subsequent explanation, what else it is, but wilful suppression ? The Tribunal has quoted in its order the admission made by the assessee that the books and records related to his business transaction and he himself explained the meaning of the abbreviations. In spite of several opportunities the assessee had not produced the accounts. The Tribunal has lost sight of the crucial point decided in State of Madras v. Jayaraj Nadar & Sons . The question of the assessing authority making an assessment on the basis of accounts of the assessee will arise only when the books of accounts are produced in answer to a notice. It will not arise when the authorities have to search and seize the materials and decode the language for discovering the transactions. The Tribunal has also failed to take note of the fact that all the watch sales had not been shown in the so-called books of account. The finding in State of Tamil Nadu v. Indian Metal and Metallurgical Corporation [1978] 41 STC 165 (Mad.) was that the assessee was under the bona fide impression that the sales were not liable to tax at all and therefore did not file declaration forms under section 3(3). The Tribunal ought not to have relied on this judgment because it is clearly distinguishable. On facts of the case the conclusion is inescapable that the penal provisions are attracted. The Tribunal had been too lenient is dealing with a recalcitrant assessee. We have no hesitation in setting aside its order and restoring the penalty of Rs. 1,72,334 as imposed by the assessing authority and confirmed by the Appellate Assistant Commissioner. The revision succeeds and is allowed. There will be no order as to costs.
6. Petition allowed.