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TMI Blog1955 (9) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... mber. A notice was issued that the net turnover would be deter- mined to the best of judgment. The petitioners sent their reply to the notice. After the reply was received, it was considered and the Deputy Commercial Tax Officer, in his order of assessment, determined the net turnover finally for 1952-53 as follows: Rs. A. P. 1. Gross turnover as per the accounts 9,30,559 13 6 2. Deduct the sales of taxed tobacco and returned goods 2,95,438 0 0 3. Balance 6,35,121 13 6 4. Add the estimated value of 10 bags of sugar which were sold and which were not shown as sold at Rs. 87-8-0 a bag ... 875 0 0 5. Total 6,35,996 13 6 6. Add 6.5 per cent. For incorrect maintenance of the accounts on account of the reasons stated above 41,340 0 0 7. Net turnover 6,77,336 13 6 The petitioners were finally assessed on this turnover to a sales tax of Rs. 10,583-6-3. The assessees preferred an appeal to the Commercial Tax Officer. The Commercial Tax Officer held that the Deputy Commercial Tax Officer was not justified in utilising the material relating to 1953-54 for enhancing the turnover of 1952-53. He characterised this as both unjust and unwarranted and allowed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essive. But the Deputy Commercial Tax Officer estimated the profit for the entire turn- over. I am restricting it to the retail business only. The turnover is refixed as below: "3. Add 6.5 per cent of item 2 for the irregularities etc. Rs. 31,893-0-0" The material portion of the judgment of the majority of the Sales Tax Appellate Tribunal fixing 5 per cent may be stated here: "If the turnover of Rs. 4,90,680-3-3 according to the Commercial Tax Officer is partly wholesale and partly retail, it is difficult to support the addition of 6.5 per cent. for an estimated suppression of the turnover. The appellant has not been in a position to give a detailed analysis of the two types of turnover 'wholesale' and 'retail' involved in this figure of Rs. 4,90,680-3-3. The State Representative also is unable to help us in this analysis. We have therefore no alter- native but to fix up a reasonable percentage for an estimated addition. Taking all the facts into consideration, we are of opinion that the addi- tion of 5 per cent. meets the ends of justice. We accordingly fix an addition of Rs. 24,534-0-2 in place of Rs. 31,893 estimated by the Commercial Tax Officer." It is not clear from any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) shall apply to the disclosure- (i) of any such particulars for the purpose of a prosecution under the Indian Penal Code in respect of any such statement, return, accounts, documents, evidence, affidavit, or deposition or for the pur- pose of a prosecution under the Act or the rules made thereunder........" Nowhere in rule 30 is there any prohibition against the disclosure of the ultimate order of assessment made on other assessees. What all is prohibited under rule 30 is the disclosure contained in a statement in the course of any proceeding or any record of any proceeding relating to the recovery of a demand, prepared for the purpose of the Act or the rules made thereunder. The assessment order is not the record of the assessee. We are not convinced that there is any prohibition in rule 30 from giving intimation to the assessee that trades similarly situated and circumstanced have been taxed on the basis of a particular percentage of profit. The learned Government Pleader relied upon the following passage from the judgment of the Privy Council in Commissioner of Income-tax, United and Central Provinces v. Badridas Ramrai Shop, Akola(1): "The officer is to make an assessment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment. Rule 11(3) also casts a duty on the assessing authority to follow the procedure prescribed in rules 8 and 9 before making a final assessment. Their Lordships of the Privy Council pointed out that although there must necessarily be guess-work in the matter, it must be honest guess-work. Honest guess-work does not mean that the assessing authority can make a dogmatic assertion that there must have been a profit of 12 per cent. It has been pointed out by the Supreme Court in Dhakeswari Cotton Mills v. Commissioner of Income-tax, West Bengal(1), as follows: "The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that state- ment had no relevancy whatsoever to the case of the mill in question. It is not known whether the mills which had disclosed these rates were situate in Bengal or elsewhere, and whether these mills were similarly si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a place in the accounts. For the year 1953-54, he found that such sales written on slips of paper, but which were not brought into, account, were more than 70 in number. A notice was issued that the net turnover would be deter- mined to the best of judgment. The petitioners sent their reply to the notice. After the reply was received, it was considered and the Deputy Commercial Tax Officer, in his order of assessment, determined the net turnover finally for 1952-53 as follows: Rs. A. P. 1. Gross turnover as per the accounts 9,30,559 13 6 2. Deduct the sales of taxed tobacco and returned goods 2,95,438 0 0 3. Balance 6,35,121 13 6 4. Add the estimated value of 10 bags of sugar which were sold and which were not shown as sold at Rs. 87-8-0 a bag ... 875 0 0 5. Total 6,35,996 13 6 6. Add 6.5 per cent. For incorrect maintenance of the accounts on account of the reasons stated above 41,340 0 0 7. Net turnover 6,77,336 13 6 The petitioners were finally assessed on this turnover to a sales tax of Rs. 10,583-6-3. The assessees preferred an appeal to the Commercial Tax Officer. The Commercial Tax Officer held that the Deputy Commercial Tax Officer was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer disposed of the matter in these words: "In addition the rate of profit in retail kirana business will be 12 per cent and the addition in that respect is not excessive. But the Deputy Commercial Tax Officer estimated the profit for the entire turn- over. I am restricting it to the retail business only. The turnover is refixed as below: "3. Add 6.5 per cent of item 2 for the irregularities etc. Rs. 31,893-0-0" The material portion of the judgment of the majority of the Sales Tax Appellate Tribunal fixing 5 per cent may be stated here: "If the turnover of Rs. 4,90,680-3-3 according to the Commercial Tax Officer is partly wholesale and partly retail, it is difficult to support the addition of 6.5 per cent. for an estimated suppression of the turnover. The appellant has not been in a position to give a detailed analysis of the two types of turnover 'wholesale' and 'retail' involved in this figure of Rs. 4,90,680-3-3. The State Representative also is unable to help us in this analysis. We have therefore no alter- native but to fix up a reasonable percentage for an estimated addition. Taking all the facts into consideration, we are of opinion that the addi- tion of 5 per cent. me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a demand, prepared for the purpose of the Act or the rules made thereunder, shall be treated as confidential and shall not be disclosed". (2) Nothing in sub-rule (1) shall apply to the disclosure- (i) of any such particulars for the purpose of a prosecution under the Indian Penal Code in respect of any such statement, return, accounts, documents, evidence, affidavit, or deposition or for the pur- pose of a prosecution under the Act or the rules made thereunder........" Nowhere in rule 30 is there any prohibition against the disclosure of the ultimate order of assessment made on other assessees. What all is prohibited under rule 30 is the disclosure contained in a statement in the course of any proceeding or any record of any proceeding relating to the recovery of a demand, prepared for the purpose of the Act or the rules made thereunder. The assessment order is not the record of the assessee. We are not convinced that there is any prohibition in rule 30 from giving intimation to the assessee that trades similarly situated and circumstanced have been taxed on the basis of a particular percentage of profit. The learned Government Pleader relied upon the following passage from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)[1937] 5 I.T.R. 170; (1937) 2 M.L.J. 43; I.L.R. 1937 Nag. 191. authority to make an enquiry before he determines the turnover of the dealer to the best of his judgment. Rule 11(3) also casts a duty on the assessing authority to follow the procedure prescribed in rules 8 and 9 before making a final assessment. Their Lordships of the Privy Council pointed out that although there must necessarily be guess-work in the matter, it must be honest guess-work. Honest guess-work does not mean that the assessing authority can make a dogmatic assertion that there must have been a profit of 12 per cent. It has been pointed out by the Supreme Court in Dhakeswari Cotton Mills v. Commissioner of Income-tax, West Bengal(1), as follows: "The estimate of the gross rate of profit on sales, both by the Income-tax Officer and the Tribunal, seems to be based on surmises, suspicions and conjectures. It is somewhat surprising that the Tribunal took from the representative of the department a statement of gross profit rates of other cotton mills without showing that statement to the assessee and without giving him an opportunity to show that that state- ment had no relevancy whatsoever to the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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