Judgment CHITRA VENKATARAMAN, J. 1. In spite of notice on the respondent, there is no representation in person or through authorised representative. Hence, the revision filed by the Revenue is considered on merits and order is passed. The assessment year under consideration is 1996-97. The above Tax Case (Revision) was admitted on the following substantial questions of law:- "1. Whether in the facts and circumstances of the case, the order of the Tribunal in having refixed the taxable turnover in respect of Tvl. Anusha Leather Pvt.Ltd at Rs.5 lakhs is legally correct while the said concern was proved to be non-existent and therefore, the suppression found out for Rs.10 lakhs had to be upheld? 2. Whether the Tribunal has legally erred in having set aside the suppression for Rs.25 lakhs found out in respect of Tvl. Bajaj Garments Limited in view of several discrepancies? 3. Whether the order of the Tribunal in not having restored the penalty as levied by the assessing officer is legally sustainable?" 2. It is seen from the narration of the facts that the place of the business premises of the assessee was inspected on 23.4.97. At the time of inspection, there was no stock available. As per the balance sheet, book stock was shown as Rs.35,08,002/-. The assessee explained that during the year they could not get any export orders. The leather, if kept in open area, would get badly damaged, hence, they sent it to Anusha Leathers, Chennai and Balaji Garments for temporary custody. Subsequently, they were received and were valued by the valuer at Rs.1,59,000/-only due to their damaged condition. Pursuant to the said information available, the Revenue undertook inspection in the business premises of one Anusha Leathers Private Limited and Balaji Garments. At the time of inspection, it was learnt that the land and building belonging to the Anusha Leathers was purchased by Anusha International Limited on 7.10.94 and they did not have any stock of the assessee. On verification of the assessment filed, it was seen that Anusha Leathers Private Limited address was given as No. 113, Govindappan Naicken Street, Chennai. But the Enforcement Wing had enquired with Anusha International Limited at No. 7, Jagannathan Street, Chennai 34. Based on the reply given by Anusha International Limited, the Officer came to the conclusion that the assessee had not actually dispatched the goods. But the Enforcement Wing had enquired with Anusha International Limited at No. 7, Jagannathan Street, Chennai 34. Based on the reply given by Anusha International Limited, the Officer came to the conclusion that the assessee had not actually dispatched the goods. Thus, the assessment as regards the turnover of Rs.10 lakhs was assessed at the assessee's hands. As far as this aspect is concerned, the Appellate Assistant Commissioner pointed out that the case of the assessee was that the goods were despatched to Anusha Leathers Private Limited and not to Anusha International Limited. Considering the fact the goods were sent to Anusha Leathers Private Limited but, enquiries was made only with regard to Anusha International Limited, the assessment of Rs.10 lakhs at the hands of the assessee could not be sustained. On appeal by the Revenue, the Tribunal pointed out that Anusha Leathers was closed in the year 1994 itself and the land and the building of Anusha Leathers was purchased by Anusha International Limited during 1994. In the circumstances, the Tribunal held that it was not correct on the part of the assessee to contend that it had handed over the goods worth Rs.10 lakhs in the year 1996 for safe custody. Since the facts clearly established that there was no such concern as Anusha Exports in the year 1996, the handing over of the garments worth Rs.10 lakhs to Anusha Exports could not believed. Hence, the assessment was sustained. It however pointed out that as the surveyor had stated that the goods were not worth of export, and except for the despatch to Anusha Leathers, there were no other materials on disposal, it would be just and proper to fix the taxable turnover for 1996-97 at Rs.5 lakhs, it being 50% of the value of Rs.10,00,000/-. 3. As regards the goods despatched to Balaji Garments, the Assessing Officer pointed out that the turnover of Rs.25,08,000/-worth of leather garments was found to have been received by Balaji Garments as evidenced by delivery challan No. 001/24.3.97. There was also proof in the form of acknowledgement given by the security staff. The Assessing Officer disbelieved this on the ground that the security staff was not on duty on 24.3.97. The Revenue contended that the inward register and delivery challan were subsequently prepared. There was also proof in the form of acknowledgement given by the security staff. The Assessing Officer disbelieved this on the ground that the security staff was not on duty on 24.3.97. The Revenue contended that the inward register and delivery challan were subsequently prepared. Consequently, the delivery challan could not be treated as evidencing receipt of the goods of the assessee by Balaji Garments. It was also pointed out that return of the goods to the assessee was not proved by check post records when they would have crossed the Ranipet check post. Thus, the assessment was made at the hands of the assessee in respect of this turnover also. 4. The Tribunal pointed out to the delivery challan 001/96-97 dated 24.3.1997 of Abu Exports and delivery challan 890/26.4.97 evidencing the despatch of goods by Balaji Garments to the assessee and held that the assessee's contention could not be doubted on the sole ground that the return of goods was not having check post seal to indicate its movement through Ranipet checkpost. In the absence of any such proof, the conclusion was that goods had not passed through at all. On a perusal of the records, the Tribunal held that the Revenue had not convincingly proved about the movement of goods from Chennai and there are no grounds to doubt the genuineness of the delivery challan. So too the entry in the inward register was not questioned by the Officers. Thus, based on the materials available, the Tribunal held that as far as the delivery of goods to Balaji Garments was concerned, there was sufficient materials to substantiate the assessee's case. Thus holding, it partly allowed the assessee's case, thereby confirmed the findings of the Appellate Assistant Commissioner. The Revenue's appeal to that extent was rejected. 5. As far as levy of penalty is concerned, the Tribunal remanded the matter back to the Assessing Officer to refix the penalty after taking into consideration the relief granted by the Tribunal. Aggrieved by this, the Revenue is on appeal. 6. As far as the claim of the assessee that the goods were despatched to Anusha Exports is concerned, the Tribunal pointed out non existence of the said concern even as early as 1994 and the land and the building belonging to the Anusha Leathers Private Limited were purchased by Anusha International Limited. 6. As far as the claim of the assessee that the goods were despatched to Anusha Exports is concerned, the Tribunal pointed out non existence of the said concern even as early as 1994 and the land and the building belonging to the Anusha Leathers Private Limited were purchased by Anusha International Limited. Thus, when the assessee had not taken any steps to prove the existence of the Anusha Leathers, the assessment at the hands of the assessee in respect of the said turnover was correct. It may be seen that having come to the said conclusion, the Tribunal pointed out that since there was no taxable sale in the previous year and disposal of the garments in the year 1996-97 was not convincingly proved by the Revenue, the proportion of the sale during the year 1996-97 was restricted to 50% of the stock alleged to have been entrusted with Anusha Leathers. Thus, it restricted the turnover to Rs.5 lakhs for the year 1995-96 and Rs.5 lakhs for the year 1996-97. As regards the restricted turnover to 50% of Rs.10 lakhs, except for the fact in respect of non existence of Anusha Leathers, the Revenue had not proved or seized any material regarding the disposal of the stock. Given the fact that the said turnover was the closing stock as on 31.3.1996 and the assessee had not in any manner pleaded that the sale should have been restricted to 50% for the year 1996-97 and the balance for the year 1995-96, we do not find any justifiable ground to accept the view of the Tribunal distributing the turnover between 1995-96 and 1996-97. On the admitted case of the assesee that the closing stock as on 31.3.1996 was Rs.10 lakhs and on the date of inspection there was no stock available with the assessee or the stock available with the so called Anusha Leathers Private Limited, the Tribunal should have confirmed the assessment of Rs.10 lakhs at the hands of the assessee for the assessment year 1996-97. To that extent, we accept the plea of the Revenue and set aside the order of the Tribunal. 7. As regards the assessment of Rs.25 lakhs in respect of stock said to have been entrusted with the Balaji Garments is concerned, the Tribunal pointed out that inward register showed the receipt of leather garments from the assessee by delivery challan 001/24.3.97. 7. As regards the assessment of Rs.25 lakhs in respect of stock said to have been entrusted with the Balaji Garments is concerned, the Tribunal pointed out that inward register showed the receipt of leather garments from the assessee by delivery challan 001/24.3.97. The assessee does not dispute the fact that under delivery challan 890/26.4.97, they had been sent back to the assessee. The genuineness of these documents were not questioned by the Revenue. When that being the case, when there was no stock available on 22.4.1997 at the time of inspection, the assessee should have offered explanation as regards the manner of disposal of the said stock. It is seen from the order of assessment that it filed return showing the taxable turnover as NIL. The assessee had not offered any explanation on this turnover as to whether the same had gone into export stream or otherwise. The only contention taken by the assessee was that they were entrusted the goods with Balaji Garments, which was later on returned to the assessee on 26.4.97 after the date of inspection and they were in poor condition. In the background of the above facts and the assessee not having shown the receipt of the goods and the manner in which it had dealt with the goods, we feel that there is every justification for including this turnover for the purpose of assessment. 8. As regards levy of penalty, the order of the Assessing Officer gives no reason for imposition of penalty indicating any intention on the part of the assessee to suppress the fact. The fact that the explanation offered by the assessee was disbelieved and rejected, per se would not lead to imposition of penalty. Taking note of the circumstances, under which the assessment had been made, the fact that there are also defects in the enquiry done by the Revenue, we do not find that this is fit case where penalty should be imposed. In any event, applying the decision in APPOLLO SALINE PHARMACEUTICALS PRIVATE LIMITED v. COMMERCIAL TAX OFFICER (SAC) AND OTHERS - 125 STC 505 wherein it was held that no levy of penalty is warranted on the assessment made solely relying on the turnover available in the books of accounts, we feel that this case does not call for any penalty. 9. 9. In the circumstances, the order of the Tribunal is set aside and the above Tax Case (Revision) is allowed. No costs.