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TMI Blog1971 (7) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee denied having made purchases from Janab Haji P.K. Usmankutty, Tellicherry, and prayed for an opportunity to cross-examine him. This was denied to the assessee. The question raised is whether this has vitiated the assessment proceedings. It is necessary at the outset to reproduce section 17 of the Kerala General Sales Tax Act, 1963, which prescribes the procedure to be followed by the assessing authority: "(1) Every dealer who is liable to pay tax under this Act shall submit such return or returns relating to his turnover in such manner and within such period as may be prescribed. (2) If the assessing authority is satisfied that any return submitted under sub-section (1) is correct and complete, it shall assess the dealer on the basis thereof. (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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales Tax Act, 1963. At the outset it has to be mentioned that what is reasonable opportunity to be granted to an assessee to enable him to prove the correctness and completeness of his return should depend upon the facts and circumstances of each case and no hard and fast rule can be enunciated regarding the same. In M. Appukutty v. State of Kerala[1963] 14 S.T.C. 489., Vaidialingam, J., in a case, which arose under the Travancore-Cochin Sales Tax Act, 1125, in considering the legality of a best judgment assessment made on the basis of the secret books of another merchant which were admitted to have been not maintained in the regular and ordinary course of business, observed: "In the first place the assessing authority in my view had absolutely no justification for relying upon the books of account of a third party, much less the secret account books, as against persons like the petitioner, without affording an effective opportunity to cross-examine those persons who are supposed to have maintained the secret accounts and from whom they have been discovered. The fact that some third party maintaining, even according to the department, some secret accounts has made certain entries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . State of Kerala[1963] 14 S.T.C. 489. and M/s. Kottachery Sridahra Srinivasa Shenoi Co. v. Sales Tax Officer1963 K.L.J. 526. do suggest that even without such a request a duty is cast on the assessing authority to provide that opportunity to the assessee. A Bench of the Gujarat High Court in Jayantilal Thakordas v. State of Gujarat(1) dissenting from M. Appukutty v. State of Kerala(2) stated the legal position in these words: "With utmost respect to Vaidialingam, J., we are unable to agree with the reasoning which he adopted in that case. He has proceeded on the footing that the evidence in the proceedings before the sales tax authorities or other similar authorities must mean the evidence recorded in the best judgment assessment as understood in law and what is commonly referred to as legal evidence. On the other hand, it is well-settled that for purposes of departmental tribunals, like the Sales Tax Tribunal, evidence means any material having probative value, irrespective of the manner in which the material is produced or of the mode of proving that particular piece of material. There are decisions of the Supreme Court in connection with the income-tax law and also in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to be adversely used against the assessee with whom the third party had inimical relationship. It is difficult to accept the contention in such a case, that the ample and reasonable opportunity to be given to the assessee would not include within its sweep the right of crossexamination." In Premier Motors (P.) Ltd. v. Commissioner, Sales Tax[1970] 26 S.T.C. 402., a Bench of the Allahabad High Court laid down the proposition in the following manner: "It is true that the Evidence Act as such does not apply to the proceedings under the Act and it is also true that the assessing authority may use certain materials which strictly speaking may not be admissible evidence in a court of law. But that does not mean that any material or information gathered by the Sales Tax Officer as a result of a private enquiry can be used against an assessee without disclosing to him the material and without affording him adequate opportunity to rebut the same. The question that would arise in such a case would be as to whether in the circumstances of the case the assessee can be said to have been afforded a reasonable opportunity to meet the case against him. It cannot be laid down as a matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by him necessitates the use of such media for collecting information as he may not like to disclose to the assessee and he is perfectly within his right if on enquiry by the assessee he refuses to disclose the source of his information. But if he makes up his mind to reject the evidence of the assessee on any grounds which appeal to him to be sufficient for that purpose, it is but fair and just that he should acquaint the assessee with those grounds so as to enable him to disabuse his mind, if possible, by explaining them away as baseless or untenable. It is, however, impossible to hold that if once the assessee under sub-section (3) of section 23 leads evidence, whether reliable or unreliable, or produces any document, whether genuine or fictitious, the Income-tax Officer must base his decision on that evidence unless he is in a position to bring on the record any definite evidence to the contrary." It is clear from the decision that though there is nothing in section 23 of the Indian Income-tax Act imposing a duty on an Income-tax Officer to disclose to the assessee the material on which he proposes to act, principles of natural justice require that the authority should draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the Income-tax Officer is obviously not bound to disclose the source of his information." In our view, the principles stated in connection with section 23(3) of Indian Income-tax Act, 1922, should apply in interpreting section 17(3) of the Kerala General Sales Tax Act, 1963. Section 17(3) insists on a reasonable opportunity to be given to the assessee to prove the correctness or completeness of such return. When materials are collected by the assessing authority and when he decides to use them against the assessee to reject his accounts, the proviso implies that those materials should be brought to the notice of the assessee to enable him to disprove the same and substantiate the completeness and correctness of his return. This is possible only when the assessee is allowed an opportunity to produce evidence. Generally it is for the assessee to decide the kind of evidence he has to adduce to disprove the materials collected against him by the officer. In the case before us the assessee had been repeatedly insisting for the cross-examination of the persons whose books are sought to be used against him. We do not agree with Vaidialingam, J., that the assessing authority should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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