1975 (9) TMI 165 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Tribunal was right in holding that the books of the assessee could be discarded without the examination of the inspector.
2. Whether the Tribunal was correct in holding that there was no material to support the best judgment assessment.

Detailed Analysis:

Issue 1: Examination of the Inspector
The Tribunal held that the books of the assessee could not be discarded without examining the inspector who reported discrepancies. The Tribunal emphasized that the absence of any remark in the stock register by the inspecting officer should be given importance, especially since the truth of the report was challenged. It was noted that the inspector, being the competent witness, should have been examined to support the report.

However, the High Court disagreed with the Tribunal's view, stating that the principles of natural justice were not violated. The court noted that the report of the inspector was disclosed to the assessee, who was given the opportunity to explain the discrepancies. The assessee never requested to cross-examine the inspector. The court held that the inspector's report, being an official act, did not require proof to form part of the record. Thus, the books could be discarded without examining the inspector.

Conclusion: The assessee's books could be discarded even without examining the reporting inspector.

Issue 2: Material to Support Best Judgment Assessment
The Tribunal concluded that there was no material on record to support the best judgment assessment. The Tribunal reasoned that the absence of any remark in the stock register by the inspecting officer and the failure to examine the inspector as a witness meant there was insufficient evidence to reject the accounts maintained by the assessee.

The High Court countered this by stating that the assessing officer and the Appellate Assistant Commissioner had accepted the inspector's report about the stock discrepancies. The court highlighted that the assessee had attempted to explain the discrepancies but failed to provide a satisfactory explanation. The court found that the accounts were manipulated subsequently, as evidenced by certain entries made after the inspection. Therefore, the Tribunal's conclusion that there was no material to support the best judgment assessment was incorrect.

Conclusion: The Tribunal was not right in holding that there was no material on record to support the best judgment assessment.

Final Judgment:
The High Court answered both questions in favor of the assessing authority, concluding that the principles of natural justice were not violated and that there was sufficient material to support the best judgment assessment. No order as to costs was made.