ORDER The assessee is a dealer in iron and steel. The total and taxable turnover reported by him in the form A1 returns was not accepted. There was an inspection and inspecting authorities noticed a stock variation. Two times addition was made to the value of stock variation and penalty was imposed. Certain records, in particular, books marked B, C and D as well as nine slips were recovered. To the value of alleged suppression relating to this, addition was made and penalty was also imposed. For want of declaration forms, a sum was disallowed and brought to tax. The Appellate Assistant Commissioner (CT) remitted that portion of the order relating to slips for de novo verification, but confirmed the original authority's order in all other respect. On appeal, the Tribunal held that the stock variation was negligible compared to the stock held by the assessee at the time of inspection. The Tribunal deleted the stock variation and the equal addition and also set aside the penalty. As regards the slips, the Tribunal accepted the explanation of the assessee and set aside the order of remittal and granted the relief as prayed for. As regard the suppression, relating to the books marked B, C and D, the Tribunal arrived at the suppression of Rs. 17,78,835, as against the sum of Rs. 20,85,634 adopted by the assessing officer. However, the Tribunal deleted the addition since it found there was no justification for the same. Finally, the Tribunal decided that the imposition of penalty was definitely warranted, but reduced the penalty to 50 per cent. The learned counsel for the appellant raised two questions of law at the time of arguments. (1) Whether the Tribunal erred in concluding that there was suppression on the basis of B, C and D books especially when the appellant had given an acceptable explanation, and the entries in the books could not be related to sales ? (2) Whether in the absence of any finding regarding wilful suppression, the penalty was justified ? The learned counsel submitted that in the assessee's factory employees worked in several shifts. So, the approximate quantity of finished goods would be recorded by not so qualified persons who work the shifts, and it is a record of approximate quantity. Whereas the actual Weighment would be recorded in the R.G. 1 register. The learned counsel submitted that in the assessee's factory employees worked in several shifts. So, the approximate quantity of finished goods would be recorded by not so qualified persons who work the shifts, and it is a record of approximate quantity. Whereas the actual Weighment would be recorded in the R.G. 1 register. He submitted that the B book showed the approximate quantity of production of finished goods on a particular day and its Weighment. Books C and D contained the approximate weight of the stock on a particular date and also the previous day production or the day's production. He referred to the statistical details recorded in the original order to demonstrate his case. He submitted that there was no justification to conclude that this discrepancy could be related to sales, or that there was suppression in the turnover. The learned counsel for the petitioner relied on Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 (Mad) [FB], State of Tamil Nadu v. Thangadurai [1983] 52 STC 279 (Mad) and State of Tamil Nadu v. S & S Industries [1992] 87 STC 120 (Mad) to show that in any event there was no warrant to impose penalty. The learned Special Government Pleader submitted that there was a detailed discussion by the Tribunal for arriving at the finding of suppression and it was only a question of fact. As regards penalty, he submitted that all the records were recovered only during inspection and so there was wilful suppression. He relied on Commissioner of Sales Tax, U.P. v. Girja Shanker Awanish Kumar [1997] 104 STC 130 (SC). (a) The Tribunal has considered the records produced and discussed the entries in detail. The Tribunal has looked book B page by page and found, - "Consequently, in so far as the book marked 'B' is concerned, the suppression at 39.321 MTs. shall be adopted on a value of Rs. 2,94,908 as against 62.596 MTs., adopted by the learned assessing officer for a value of Rs. 4,68,184." (b) For book C, the Tribunal has accepted the assessee's plea that while computing the production details as available in the records, the stock in R.G. 1 register from previous day has not been considered. So the Tribunal deleted 6 MTs. Then page by page this book has been seen and it was found, - "Consequently, the suppression at the rate of Rs. So the Tribunal deleted 6 MTs. Then page by page this book has been seen and it was found, - "Consequently, the suppression at the rate of Rs. 7,500 per MT shall be reckoned at Rs. 11,07,229 only as against Rs. 12,40,818." (c) As far as book D is concerned the Tribunal rejected the appellant's case. But we see that on the whole the Tribunal has considered the explanation of the assessee, granted some relief but was unable to accept the same in toto. This is a factual finding on consideration of the materials before the Tribunal. So we are unable to interfere and the question is answered in the negative. Now we come to the award of penalty - (i) Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 (Mad) [FB] held : "... All the circumstances of the case will have to be carefully scrutinised and the question whether penalty should be imposed must be considered on the basis of the judicial determination of the question whether grounds exist for the imposition of such penalty. In order that penalty may be imposed, it must be possible first to come to the conclusion that there was actually turnover and further that that turnover was not disclosed. The mere fact of a best judgment assessment, particularly when the assessment is based on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty, for the degree of proof required for the imposition of penalty is quite different from and is of a much higher order than that required for the purpose of making a best judgment assessment." (ii) In State of Tamil Nadu v. Thangadurai [1983] 52 STC 279 this court held : "... But in the matter of levy of penalty the fact that the assessee is not able to explain certain documents will not ipso facto lead to the fact that the assessee has wilfully suppressed the turnover. But in the matter of levy of penalty the fact that the assessee is not able to explain certain documents will not ipso facto lead to the fact that the assessee has wilfully suppressed the turnover. As has been held by this court in Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 (FB) in order that penalty may be imposed, it must be possible first to come to the conclusion that there was actually a turnover and further that the turnover was not disclosed by the assessee and that merely because the assessment is a best judgment assessment the levy of penalty is not automatic. Since the assessee in this case has been contending that he has no turnover at all for the purpose of tax he cannot be said to be guilty of concealment of the portion of the turnover assessed. ..." (iii) In State of Tamil Nadu v. S & S Industries [1992] 87 STC 120 (Mad), it is held thus : "9. In the instant case it is found that the incriminating documents recovered at the time of inspection and the account books were tallied and verified by the officers as well as the representative of the State before the Appellate Assistant Commissioner. It was found that the entries in the pocket note book tallied with the entries in the account book except for the omission of the entries amounting to Rs. 58,110, which reflected the amount received by the assessee by way of premiums for the sale of the goods. The assessee did not dispute that the amount had been received. The assessee did not even dispute the entries made in the pocket note book. The case of the assessee was that the amount of premiums collected by it were for the priority supplies of goods and would not form part and parcel of the sale amount. The plea of the assessee was not accepted by the statutory authorities including the Tribunal. But the explanation of the assessee cannot be ignored while considering the exercise of discretion by the Tribunal for deleting the penalty levied under section 12(3) of the Act. The explanation which did not find favour could have been based on a mistaken notion that premium is not required to be included in the sale price. But the explanation of the assessee cannot be ignored while considering the exercise of discretion by the Tribunal for deleting the penalty levied under section 12(3) of the Act. The explanation which did not find favour could have been based on a mistaken notion that premium is not required to be included in the sale price. The Tribunal, after a detailed discussion with regard to the levy of penalty observed : 'In the circumstances of the case we feel that this is not a case for levying penalty and the penalties levied under the Tamil Nadu General Sales Tax and Tamil Nadu Addition Sales Tax Acts are set aside, and the turnover refixed by the Appellate Assistant Commissioner is confirmed.' We find from the order of the Tribunal that nothing irrelevant was taken into consideration nor anything relevant left out while deleting the penalty. The mere non-acceptability of an explanation of an assessee with regard to certain entries cannot ipso facto lead to a conclusion that the assessee had wilfully suppressed the turnover. But be that as it may, since the Tribunal did not find any wilful suppression on the part of the assessee to disclose the turnover, the exercise of discretion cannot be said to be perverse or non-judicious as to call for interference in exercise of the revisional powers of this court. From the facts and circumstances of the case, we are satisfied that the Tribunal exercised the discretion properly and judiciously, in the peculiar facts and circumstances of the case. We therefore do not find any reason to interfere with the order of the Tribunal. The revision fails and is dismissed but we make no order as to costs." (iv) in Commissioner of Sales Tax, U.P. v. Girja Shanker Awanish Kumar [1997] 104 STC 130 (SC) the question was not regarding penalty, but whether a best judgment assessment can be made, if stock register is not maintained. The assessee gave an explanation for the alleged discrepancies between the books B, C and D and the R.G. 1 register. According to him, the entries of the previous days product in Register B were wrongly correlated to the subsequent production and this is incorrect. The assessee gave an explanation for the alleged discrepancies between the books B, C and D and the R.G. 1 register. According to him, the entries of the previous days product in Register B were wrongly correlated to the subsequent production and this is incorrect. For register C, his explanation was that the difference was nothing but the production of the rest of day up to the time of noting down the stock particulars in Register C and that this register works as a rough and ready stock book to know the stock at a particular time of the day. And because of this sometime the R.G. 1 register will show more stock. A similar explanation was given with regard to register D also. While considering these records the Tribunal has accepted that there is some substance in the submission that, - "While computing the production details as available in the recovered records, the stock brought forward in the R.G. 1 register from the previous day has not been considered." and accepting this, the Tribunal has deleted the alleged suppression to the extent of 6 MTs. As regards the alleged suppression even the stand of the Revenue is that the "theory of entering the production details on the next day withers into insignificance because on many dates the production entry and the R.G. 1 entry tally on the same date". So on facts the production details show discrepancies only on some dates and on many dates they tally. According to the assessee, on some occasions the entry would be made by the person on the spot at the shift and the next date the correct entry would be made, and that on this account there are variations on some dates, and that the very fact that the entries tally on many dates would show that there was no intention to suppress. In fact even the Tribunal held that the stock variation was negligible compared to the available stock, and that is why the Tribunal granted relief in that regard. So actually this is a case where the Tribunal was not convinced by the explanation given by the assessee for the discrepancies between the entries in the B, C, D book and the entries in the R.G. 1 register. So actually this is a case where the Tribunal was not convinced by the explanation given by the assessee for the discrepancies between the entries in the B, C, D book and the entries in the R.G. 1 register. In State of Tamil Nadu v. S & S Industries [1992] 87 STC 120 (Mad) also the entries in the pocket book tallied except to the extent of Rs. 58,110 the assessee gave an explanation, which was not convincing, but he did not dispute the entries. The Tribunal held that this ipso facto would not amount to wilful suppression. This court confirmed this. In State of Tamil Nadu v. Thangadurai [1983] 52 STC 279 (Mad) also this court said that incriminating documents may be taken into account for assessment, if no satisfactory explanation is given; but for penalty there should be wilful suppression. Here the penalty is awarded because "... it is for the appellants to explain the entries in relation to the regular books of account maintained by them, and inasmuch as there is a difference between the records recovered and the regular books of account, the natural inference is that the difference ought to have been disposed of out of books which is normal in this line trade". So there is no evidence of suppression but only inference of suppression on the ground of non-explanation. And on that basis penalty has been awarded. This is exactly contrary to the above decisions. We have seen above that all along the case of the assessee has been that the entries in the relevant registers were wrongly correlated. He has given various explanations for the variations in the entries. These explanations did not find favour with the Tribunal. At the same time it is as if the Tribunal has totally rejected the explanations. It has accepted the explanation to some extent and has actually deleted stock variation and equal addition. It had also accepted the explanation of the assessee with regard to the slips. The present case relates to assessment year 1989-90. The assessment order is dated March 15, 1993. Prior to May 28, 1993, section 12(3) gave the assessing authority the discretion to impose penalty if there was wilful non-disclosure by the dealer in his return. It had also accepted the explanation of the assessee with regard to the slips. The present case relates to assessment year 1989-90. The assessment order is dated March 15, 1993. Prior to May 28, 1993, section 12(3) gave the assessing authority the discretion to impose penalty if there was wilful non-disclosure by the dealer in his return. It is only after the Act 25 of 1993 came into force with effect from May 28, 1993 wherein section 12(3) underwent a modification and the words relating to wilful non-disclosure and wilful failure were removed. Therefore, for this in the instant case, we may safely apply the three judgments referred to. In these circumstances, and following the Full Bench decision, Kathiresan Yarn Stores v. State of Tamil Nadu reported in [1978] 42 STC 121, relied on by the assessee it is difficult for us to conclude that there has been a wilful concealment. The levy of penalty is not automatic. There should be a finding that there is wilful suppression. The Tribunal was of the opinion that in the line of trade which was carried on by the assessee disposal of goods out of books is normal. Such a conclusion does not satisfy the test laid down by the Full Bench that the degree of proof required for imposition of penalty is of a much higher order than for the purpose of making a best judgment assessment. In these circumstances and on the above facts, the answer to the question No. (1) is answered in the negative and against the assessee and question No. (2) is answered in favour of the assessee and the imposition of levy of penalty is set aside and the tax case (revision) is partly allowed.