1970 (4) TMI 136 - HC - VAT and Sales Tax

Summary

Issues:
1. Imposition of penalty under section 43(1) in an assessment under section 18(4) based on best judgment.
2. Reasonableness of the estimate of turnover at Rs. 1,00,000.

Analysis:
1. The judgment pertains to a reference under section 44 of the Madhya Pradesh General Sales Tax Act, 1958. The first issue involves the imposition of a penalty under section 43(1) in an assessment under section 18(4) based on best judgment. The case involved an assessee who had substantially minimized the gross sales in the return. The assessing officer found discrepancies, leading to an assessment of the gross turnover at Rs. 1,00,000 and imposition of a penalty of Rs. 1,000. The Board of Revenue opined that the penalty could not be imposed as the assessing officer did not definitively establish the concealed amount. However, the High Court disagreed, stating that section 43(1) does not require the exact concealed amount to impose a penalty. The court held that once concealment or false return is established, the assessing authority can impose a penalty based on the tax avoided. The court ruled in favor of the department on this issue.

2. The second issue concerns the reasonableness of estimating the turnover at Rs. 1,00,000. The assessee had initially shown a gross sale of Rs. 58,633 and 11 annas but was found to have concealed turnover worth about Rs. 25,000. The court found that increasing the turnover by Rs. 50,000 from what was returned was not excessive given the circumstances. Therefore, the court answered the second question in favor of the department. Additionally, the court directed the assessee to pay the costs of the Commissioner fixed at Rs. 100. The reference was answered accordingly, upholding the assessment and penalty imposed on the assessee.