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TMI Blog1968 (7) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... s in rejecting the petitioner's accounts, but it held that the enhancement of the turnover by 40 per cent. was unreasonable, and limited the addition to Rs. 1,00,000. The petitioner has objected to the above order of the Tribunal, and moved this Court in revision, raising the following questions of law: (i) Whether on the facts and in the circumstances of the case, the findings of the Tribunal that the books of accounts of the petitioner and the turnover returned by it in respect of purchase turnover of prawns and lobsters are incorrect and incomplete and that they are to be rejected, are warranted? (ii) Whether there is material to support the estimated addition of Rs. 1,00,000 to the purchase turnover, as ordered by the Tribunal? 2.. It is necessary to state a few more facts to know how the above questions arise. The petitioner purchases prawns and lobsters partly at Cochin, and partly from outstations. Goods purchased from outstations are transported to Cochin for the purpose of being processed and exported. Section 29 of the Act provides for establishment of check posts and inspection of goods in transit with a view to prevent and check evasion of tax. Sub-section (2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t December, 1964, in the name of one P.K. Aziz, Cochin, showing purchase of 4,166 kgs. of prawns; and there is also another entry in the name of the same person on 2nd December, 1964, showing the purchase of 3,395 kgs. The petitioner submitted that T. Mammu mentioned in way-bill F-208 was the agent of P.K. Aziz, and on 1st December, 1964, the petitioner purchased 4,166 kgs. of prawns from him, out of which 3,000 kgs. were transported by lorry as per F-208 and 1,166 kgs. were transported by rail, and that the goods consigned to the petitioner had thus been actually accounted in the petitioner's books. Regarding the goods transported as per way-bill F-210, the petitioner submitted that the 3,000 kgs. of prawns covered by the said way-bill were purchased from P.K. Aziz, and that the credit given to him on 2nd December, 1964, for 3,395 kgs. of prawns consisted of 3,000 kgs. transported under this way-bill and 395 kgs. locally purchased from him. The Sales Tax Officer did not accept the above explanation. Regarding the consignment as per F-208, he stated: "So long as there are no receipts in the name of Mammu, it cannot be said that their receipt has been accounted for. Though it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the petitioner has not entered in his accounts any of the purchases as per the way-bills whose duplicates were missing. The rejection of the accounts by the Sales Tax Officer is based solely on the alleged non-accounting of the consignments transported as per F-208 and F-210. This is clear from the manner in which he has determined the turnover to his best judgment. He took the total purchases on 1st December, 1964, and 2nd December, 1964, as per the books of accounts of the petitioner. The value of the consignments transported on these two dates as per F-208 and F-210 worked out 40 per cent. of the total purchases on these two dates. He assumed that this must be the percentage of suppression for the remaining 364 days of that year; and on that basis he added 40 per cent. of the total purchases disclosed by the books of accounts to arrive at the proper taxable turnover. This means that the non-production of the duplicates of the way-bills mentioned in his order was neither a ground for rejection of the accounts, nor was it a consideration in determining the turnover. The Appellate Tribunal's order also states that "the main ground relied on by the Sales Tax Officer for rejecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the finding of the Sales Tax Officer. This is not a ground for the rejection of accounts; and this is sufficient to dispose of the first question raised in this revision petition in favour of the petitioner. 6.. We, however, propose to examine the question on the merits in the light of the undisputed facts as disclosed by the records and the finding of the Appellate Tribunal. The petitioner maintains proper books of accounts, and they are being audited and certified by a reputed firm of chartered accountants. Its accounts have been fully accepted by the sales tax department in the previous and subsequent years. A copy of the order of assessment made by the Income-tax Officer, Ernakulam, under the Income-tax Act, 196 1, for the year 1964-65, which it produced before the Appellate Tribunal along with several other documents, shows that its books of accounts were fully accepted by that department also. The balance-sheet and profit and loss account of the petitioner show that it exports most of the goods purchased by it, that, on the export sales, it makes a large profit on account of import entitlements obtained from the Government of India as export incentive. Otherwise, the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on offered by the petitioner, the matter could have been verified with P.K. Aziz, who is a dealer in Cochin. He could have ascertained from that dealer whether he sold any prawns to the petitioner on the above dates, if so, what were the quantities that were sold to the petitioner on the said dates, wherefrom the sales were made, and how the goods were delivered to the petitioner. When the books of account show entries relating to the purchase of goods which would cover the goods transported as per way-bills F-208 and F-210, the burden is on the revenue to show that the said entries did not relate to the goods transported under these way-bills; but they related to different goods. We can find absolutely no material to hold that the said entries contained in the books did not cover the goods transported as per these way-bills, or to reject the petitioner's explanation. 8.. It is well established that the function of an assessing officer is quasi-judicial, and that he should be governed in his procedure by judicial considerations. In Mehta Parikh Co. v. Commissioner of Income-tax, Bombay[1956] 30 I.T.R. 181; A.I.R. 1956 S.C. 554. , the Supreme Court said: "The court would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been specifically raised. We have already referred to the manner in which the turnover was determined by the revenue authorities to the best of judgment. The value of the goods transported as per way-bills F-208 and F-210 was 40 per cent. of the value of the goods purchased on 1st December, 1964, and 2nd December, 1964, as per the accounts of the petitioner. After holding that the goods covered by way-bills F-208 and F-210 did not go into the accounts, the Sales Tax Officer determined the total turnover by adding 40 per cent. to the turnover of the year as shown by the accounts. This involves the assumption that on all the 366 days of that year the petitioner made purchases, and on every one of these days there was a similar extent of suppression. The result of this process of reasoning would be that, if the value of the goods covered by the above way-bills was twice the value of the goods purchased on the above two dates, the Sales Tax Officer would have determined the turnover at thrice the amount shown by the books of accounts; and if the accounts did not disclose any purchases on the above dates, the result would have been unimaginable. The manner in which the Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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