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TMI Blog1953 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in rejecting the books of account and making assess- ment according to the best of his judgment. Order of the Commissioner of Sales Tax dated 7th November, 1949, is marked Exhibit C. The assessee then moved the Board of Revenue, Bihar, by petition dated 11th November, 1949, Exhibit D, for revising the order of the Commissioner of the Chota Nagpur Division. The Board after hearing the parties dismissed the revision petition by its order dated 20th February, 1950, Exhibit E. The assessee being aggrieved at the orders of the Board came up before it by petition dated 15th June, 1950, Exhibit F, to refer the following questions of law to the Honourable High Court. Questions: Whether on the facts and in the circumstances of the case, the conclusion arrived at regarding the petitioner's gross and taxable turn- over are legally sound or not. Whether the addition of the sum of Rs. 93,533-5-0 to the gross turnover for the quarter on the likelihood of the petitioner having carried on business in food-grains etc., completely ignoring the fact that the petitioner's licence as a dealer in food-grains had been cancelled in 1945, could lawfully be justified as best judgment assessment unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has clearly taken steps to hide the real turnover. When this is proved, the only question left open to the assessing officer is to assess after estimating the possible amounts suppressed from the account books. These points are purely questions of fact, and not of law. Then there is a point about Shri Dayal Bajaj being a partner. The finding of the Commissioner is that he is not a partner. It cannot be said that the Commissioner cannot come to a finding like this, just because the Sales Tax Officer and the Income-tax Officer mentioned him as a partner. The Commissioner gives reasons to hold that Bajaj was not a partner. Again, this is a question of fact. If at all a point of law can be raised, it will be on an argument that the assessment is arbitrary Sand excessive. A best of judgment assessment is bound to be specula- tive, but it has to be based as far as possible on information available. The conduct of the assessee, as available from the information collected, justifies the assessment. The assessee has now moved the Honourable High Court and the Board, as required in order dated 5th October, 1950, in M.J.C. No. 173 of 1950, refers the following three questions of law for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J. Ram Lal 4 " 20-10-1948 4 bales Messrs. Ram Swarup Mohan Lal. 15432/38 Ahmedabad Vishun 14 " 29-7-1948 7980/82 W. Bunder Bala Chand 1 " 26-8-1948 7992/80 Do. R. Mohan Lal 20 " 15-9-1948 35 bales 38/21278 Ahmedabad Chatterbhuj 4 " 1-10-1948 4 bales These figures were not to be found in his accounts and on being questioned the dealer completely denied to have received them but in the face of documentary evidence present in the Railway Station against these firms, their contention holds no ground. It is clear that no sales tax would have been paid on the receipt of these bales of cloth if the department had not actively obtained this information from the Railway department. Evidently, the dealer took advantage of the non-submission of returns by him and deliberately produced false accounts to evade the payment of tax. The books of accounts have, therefore, to be rejected and assessment is made to the best of judgment. The price of a bale of cloth varies usually between Rs. 1,000 and Rs. 3,000 according to the quantity and quality of cloth. Taking then that the average price of each bale was about Rs. 2,000 the price of 122 bales calculates to Rs. 2,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the Sales Tax Officer dismissed the appeal. His observa- tions made in his judgment on the 1st question of law is quoted below for facility of reference: "From the conduct of the appellants it is clear that they had no good evidence to produce to prove that the cloth business had nothing to do with them and certain additional facts in this connection have been mentioned in argument before me which have not been refuted. These are that Jaidayal Bajaj is a servant of Mr. Nagarmal Modi and that there is no proof of any shares in the firm invested by him or of any distribu- tion of profits to him. The temporarily created firm of Ram Swarup Mohan Lal existed only during the time of cloth decontrol. It had the same premises as Bhimraj Nagarmal and operated on the same bank account. Even a railway claim for Rs. 600 in favour of Ram Swarup Mohan Lal was cashed by Messrs. Bhimraj Nagarmal. These assertions have not been refuted by Messrs. Bhimraj Nagarmal, but it is stated that full evidence of the partnership will be offered. Even at the hearing of the appeal no such evidence was produced. In these circumstances, the learned Sales Tax Officer acted rightly in rejecting the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... msaroop Mohanlal merely for the purpose of evading sales tax. The Sales Tax Officer accordingly held that the sales of cloth in the name of Messrs. Ramsaroop Mohanlal were really sales of the petitioner firm, upon whom was imposed the liability to pay the tax. For the three quarters in question the Sales Tax Officer computed upon the material available before him that the petitioner was liable to pay tax on the sale of cloth to the extent of Rs. 1,05,800, Rs. 1,56,400 and Rs. 18,400. The Sales Tax Officer further held that the petitioner had suppressed also the sale of food-grain to the extent of Rs. 93,533-5-0 for each of the three quarters. Assessment was made upon the petitioner according to these figures. Appeals were taken by the petitioner to the Commissioner of Sales Tax against the order of the Sales Tax Officer but the appeals were dis- missed. Revision petitions were then preferred before the Board of Revenue but these petitions were also rejected. At the instance of the petitioner the High Court has required the Board of Revenue to refer the following questions of law: "(1) Whether the turnover of the separate business of a partner could be amalgamated with the turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner noted and this fact has been referred by the Board of Revenue in the course of its order that a railway claim of Rs. 600 in favour of Ramsaroop Mohanlal was cashed by Messrs. Bhimraj Nagarmal. In these circumstances it is impossible to accept the argument of the learned counsel for the petitioner that there was no material to support the finding of the Sales Tax Authorities that the firm of Ramsaroop Mohanlal was a bogus firm created by the firm of Bhimraj Nagarmal for the purpose of the sale of cloth and for the purpose of evasion of sales tax. The question is primarily a question of fact and the finding of the Sales Tax Authorities on this question is supported by sufficient material. The second question is somewhat more difficult. The contention of the petitioner is that even if the sale of cloth made by Ramsaroop Mohanlal was held to be really sale of cloth in the name of Messrs. Bhimraj Nagarmal, there was no material before the Sales Tax Authori- ties which would justify the order made against the petitioner. We have already said that for the three quarters from 1st April, 1948, to 31st December, 1948, the Sales Tax Officer had calculated the sale of cloth to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... armal Chandi Prasad and one to Bhimraj Nagar- mal or Ramsaroop Mohanlal. It follows therefore that as regards the four consignments which were delivered to Chotanagpore Umbrella Works, Dharamchand Jwalla Dutta and Nagarmal Chandi Prasad, the assess- ment made on the petitioner for the sale of cloth is arbitrary. So far as assessment is based upon the other 11 consignments, which is set out at page 4 of the paper book, it must be held that assessment is based upon proper material. It is for the Sales Tax Authorities to ascertain which of the four consignments of those mentioned at page 4 of the paper book were delivered to the outsiders and to make a proportionate alteration in the assessment made on the petitioner for the sale of cloth. We answer the second question in the manner indicated above. The third question is whether there was any material to justify the addition of Rs. 93,533-5-0 on account of sale of food-grain etc., specially because the licence for food-grains granted to this firm was cancelled in the year 1945. On this point the argument put forth on behalf of the petitioner is that there is no material to justify the assessment except certificate of registration wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rai Shop(1): "Their Lordships find it impossible to extract these requirements (1)[1937] 5 I.T.R. 170; 64 I.A. 102 at p. 114. from the language of the Act, which after all is, in such matters, the primary and safest guide. The officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information. He must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assess- ment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assess- ments of the assessee and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest guess-work." In our opinion the third question must be answered in favour of the assessee and it must be held that there is no material to justify the addition of Rs. 93,533-5-0 on account of sale of food-grains etc., f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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