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TMI Blog1971 (2) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant years was purchase and sale of rubber, which was then taxable at the point of first sale in the State. Their sales were to M/s. Munnalal Bhalotia and Co., Cochin, and Bata Shoe Company, Kottayam, both of whom had purchase depots at Palai. On inspection of the books of accounts of these companies, the respondent noticed large quantities of purchases in the names of three persons. He found for the reasons stated in his orders of assessment made against the petitioner in O.P. Nos. 3695 and 3697 that they were fictitious persons in whose names the petitioner sold rubber to the above companies. On the above basis the petitioner's books of accounts were rejected and his turnovers for the years 1960-61 and 1961-62 were fixed more or less at twice the amounts returned by him. The petitioner's contention that he has not made any sales to the above companies except those disclosed by his books of account was rejected by the respondent. The petitioner applied to the respondent to summon the representatives of the above two companies, and give him an opportunity to cross-examine them with reference to the account books relied on by the respondent so as to enable the petitioner to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tine transactions with the above companies, and his rebuttal was only a device to evade payment of tax. The petitioner again filed an appeal; and the Appellate Assistant Commissioner, by his order dated 24th April, 1968, copy of which is marked as exhibit P-4 in this writ petition, set aside the order of assessment, and remanded the case, reiterating the direction to summon the representatives of the said companies and give the petitioner an opportunity to cross-examine them. The respondent again refused to summon the above persons; and confirmed the previous assessment by his order dated 9th June, 1969, holding that the petitioner's contention that he should be given an opportunity to cross-examine the above persons was unsustainable. Exhibit P-7 is a copy of the above order. 5.. The petitioners contend that the Appellate Assistant Commissioner has accepted the contention that rejection of their books of account, and estimating their turnover on the basis of entries found in the books of the above two companies without giving them an opportunity to crossexamine the representatives of those companies is violative of natural justice, and that the assessments made by the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Officer nor the assessing authority is seen to have taken any action on this request and the assessments were completed without giving to the appellant an opportunity to cross-examine the parties, books detected from whom were relied upon by the assessing authority for making the additions. In the light of the decisions cited above the contention on this point appears to have much force and the additions made in the circumstances cannot be sustained. I am therefore inclined to remand the cases to the officer for fresh disposal after taking proper action on the appellant's request for cross-examination of the parties in the light of the various High Court decisions on this point." The finding of the Appellate Assistant Commissioner and his direction to the respondent are very clear. It is interesting to note in what manner, he disregarded and despised the above finding, and flouted the direction of the appellate authority. The impugned orders speak for themselves; and I shall read exhibit P-6 in O.P. No. 3695: "The assessment was finalised on 25th February, 1965, and the appeal preferred by the dealer was remanded by Appellate Assistant Commissioner in order No. 18/65-66/31-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be untenable. The dealer was informed of this in notice dated 10th April, 1969. In the reply dated 18th April, 1969, he is again initiating the same point of violation of natural justice. It is found to be quite unsustainable. So they are overruled and the assessment finalised as under." Now this court has held in Appukutty v. State of Kerala[1963] 14 S.T.C. 489 which is one of the two decisions relied on by the Appellate Assistant Commissioner that an assessment cannot be based on the entries found in the books of account of a third party without giving to the assessee an opportunity of crossexamining that party with reference to those books, if so required. That is a requirement of natural justice. In that case, Vaidialingam, J., stated: "The fact that some third party maintaining, even according to the department, some secret accounts has made certain entries in his accounts which may connect a person like the petitioner, by itself will not give jurisdiction to the assessing authority to utilise that information, unless that person has been given ample opportunity in the presence of the person who has kept the secret accounts to effectively cross-examine him and elicit the nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case is far worse. Not only that the respondent refused to follow the law laid down by this court and flouted the direction of the appellate authority, but he also went to the extent of holding that the decision of this court and the direction of the appellate authority were both wrong under law. I am unable to understand the conduct of the respondent. It may be that he wanted to display his better learning, or it may be the result of frustration of some hopes he had from the petitioners. Or it may also be due to his over-enthusiasm in support of the revenue or the reaction of a pernicious tendency to harass the assessee. Whatever that may be, the respondent has grossly misconducted himself and failed to discharge his duty by refusing to implement the direction of the Appellate Assistant Commissioner in making fresh assessments. 6.. In justification of his above conduct the respondent has casually stated in his orders of assessment that these companies "have ceased to function since a long time and to afford an opportunity to cross-examine the representatives of the firms that are not existent is an impossibility". With reference to the above statement paragraph 7 of the, petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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