1978 (8) TMI 195 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of turnover based on rejected account books and estimate made by assessing authority for the year 1971-72.

Analysis:
The judgment pertains to a revision by the assessee challenging the rejection of account books and the estimate of turnover made by the assessing authority for the assessment year 1971-72. The rejection of the account books was primarily due to a survey conducted on the firm's premises, revealing discrepancies in the kachcha rokar and the absence of the stock register. The assessee explained that no entries were made on a particular day due to a festival and that the stock register was not requested by the surveying officer. However, the revising authority found the explanation inadequate and concluded that the accounts were not maintained properly, justifying the rejection. The non-availability of the stock register raised suspicions about the genuineness of the accounts, leading to their rejection despite no specific defects found. The revising authority emphasized the importance of regular maintenance of accounts to avoid rejection based on such considerations.

Regarding the assessment of turnover, the Sales Tax Officer estimated it at Rs. 29,00,000, higher than the assessee's reported turnover of Rs. 21,57,717. The appellate authority and revising authority upheld the estimate, considering past turnovers and alleged suppression in subsequent years. However, the judgment criticized the reliance on the assessee's conduct in later years to estimate the turnover for the current year. Each assessment year should be treated independently, and decisions should not be influenced by factors from other years. The judgment highlighted errors in the appellate order, where past records did not provide a reasonable basis for the substantial increase in turnover. The assessment must be based on the best judgment of the assessing authority, requiring care and caution to ensure reasonableness. The judgment found the estimated turnovers for prior years inaccurately considered, leading to an erroneous turnover estimate for the current year. Consequently, the revision was allowed, directing a reassessment of the turnover in accordance with law and the observations made in the judgment. Costs were not awarded due to the partial success and failure of the parties in the case.