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TMI Blog1970 (9) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... is judgment: Provided that before taking action under this clause the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him." The Act of 1125 has been replaced by the Kerala General Sales Tax Act, 1963. The section in the 1963 Act corresponding to section 12(2)(b) of the General Sales Tax Act, 1125, is section 17(3), which we may extract: "17. (3) If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return." The difference in the wording of the two sections, the section in the later enactment conferring specifically on the assessing authority power for making su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de on the turnover relating to hill produce to the extent of Rs. 1,44,000 arrived at by assuming that there must have been suppressions more or less similar to the extent indicated for the period from 17th January, 1962, to 21st January, 1962, for the whole of the season of three months was sustained. The question is whether this inference is sustainable on the materials that were available. This question has arisen in one form or other in many decisions. We shall examine some of them. 4.. Nothing said in any of the decisions that have been cited before us has improved upon what has been stated by Lord Russell of Killowen in Commissioner of Income-tax, Central and United Provinces v. Laxminarain Badridas[1937] 5 I.T.R. 170 (P.C.). No doubt, the statement was made in connection with the assessment to income-tax and with reference to section 23(4) of the Indian Income-tax Act, 1922. But the question that arose therein is the same as the one before us and it will be useful to read a passage from the judgment: "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 vindi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3)." Their Lordships also referred to a decision of the Lahore High Court in Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab[1944] 12 I.T.R. 393., which was approved by the Supreme Court in Dhakeswari Cotton Mills' case[1954] 26 I.T.R. 775 (S.C.). and emphasised the rules laid down in the decision which are as follows: "(1) While proceeding under sub-section (3) of section 23 of the Incometax Act, the Income-tax Officer is not bound to rely on such evidence produced by the assessee as he considers to be false; (2) if he proposes to make an estimate in disregard of the evidence, oral or documentary, led by the assessee, he should in fairness disclose to the assessee, the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er are implicit in the expression 'best of his judgment'. Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a 'best judgment assessment', it shall not be a wild one, but shall have a reasonable nexus to, the available material and the circumstances of each case. Though subsection (2) of section 12 of the Act provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard for the available material." 5.. The principles laid down in the above decisions have been applied in a number of cases of varying facts before this court. It is unnecessary to refer to all those decisions as the question that arises specifically in this case is whether on the materials available before the assessing authorities an honest conclusion was possible that the petitioner must have been indulging more or less consistently in the practice of suppressing his turnover, so that the assessment of the suppression for the season of three months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were cited before us in support of the contention that from a single suppressed transaction an inference can be drawn that there must have been concealments throughout the year and to the same extent on each day. Rosette Franks (King Street) Ltd. v. Dick (H. M. Inspector of Taxes)36 Tax Cas. 100., Jami Biswanath Prusthy v. Commissioner of Sales Tax, Orissa[1961] 12 S.T.C. 606., and D. Sreenivasappa v. The State of Madras[1964] 15 S.T.C. 784. have been relied on. If these decisions lay down anything other than what has been ruled by the Supreme Court, we must respectfully dissent from the view. The Supreme Court has categorically stated..........the estimate must be related to some evidence or material and it must be something more than mere suspicion" (vide Raghubar Mandal Harihar Mandal v. The State of Bihar [1957] 8 S.T.C. 770 (S.C.)., already referred to) and that "..........under sub-section (3) of section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all" (vide Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal[1954] 26 I.T.R. 775 (S.C.)., also already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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