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TMI Blog1973 (6) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... th January, 1968, and was to the tune of Rs. 232.05. The proceedings under section 12(8) of the Act were thereafter taken against the assessee and on 21st December, 1968, a best judgment assessment was completed. The assessee's first appeal was dismissed but the enhancement of Rs. 6,000 adopted at the assessment stage was reduced. The assessee appealed to the Tribunal. The Tribunal held: "...........In the regular assessment a small defect was found for which there had been an estimate and the enhancement was Rs. 2,000. It was in view of that that the learned first appellate authority reduced this Rs. 6,000 enhancement to Rs. 2,000. It was contended on behalf of the appellant that the present omission is without mala fides, the purchase having been made by the utilisation of the registration certificate and further the omission having been covered by the previous enhancement in the regular proceeding, the present enhancement of Rs. 2,000 is unsustainable. I think, there is some substance in the argument. Even then in the 12(8) proceeding, I would bring down the enhancement to the actual omission, i.e., Rs 232.05 and the penalty from Rs. 50 to Rs. 15 .........." Thereupon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported by bills. Sales are also effected through issue of bills. Purchase and sale registers are also maintained. But the dealer is not maintaining any stock register, even though the maintenance of such a register is easy on account of the purchases and sales being vouched. No stock-taking is done at any time as a result of which it is not possible to know the correctness of purchases and sales. The present proceedings under section 12(8) of the Orissa Sales Tax Act have been opened upon the dealer having been detected by an Inspector of this department not to have accounted for purchases of electrical bulbs made from M/s. K.S. Kumundan Sons of Rayagada on 11th January, 1968, worth Rs. 232.05 against bill No. 64-7 dated 11th January, 1968, of the sellers. The managing partner while giving a statement before the Inspector states that no such purchase was made by the dealer. The seller being a registered dealer was issued a declaration by the managing partner of the firm for these purchases but it is curious to know that he contends not to have purchased the same. Before me, of course, the managing partner contends that during his absence in the shop from 8th January, 1968, up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rate of 10 per cent in respect of added turnover cannot be entertained as the facts of the case, as discussed above, do not admit of any doubt in regard to the incompleteness and incorrectness in the maintenance of accounts. The reduced turnover of Rs. 2,000 is distributed between the different tax rate groups in the following manner.........." The appellate authority had thus sustained the enhancement of Rs. 2,000 to the turnover in the reassessment proceeding. 4.. Before us, counsel for the assessee does not contend that the books of account were not liable to be rejected. The question that has been mooted and argued at considerable length with vehemence by Mr. Misra for the assessee is on the conceded footing that even when the accounts were liable to be rejected, there was no scope for a best judgment assessment in a proceeding under section 12(8) of the Act. It has also been contended that there having already been a best judgment assessment under section 12(2) of the Act for the same period, a second best judgment assessment is not permissible. 5.. Section 12(8) of the Act as far as material provides: "If for any reason the turnover of a dealer for any period to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the registered dealer. The view that we have taken is supported by the language of section 13(4)(g) of the Act which states that the State Government may make rules for 'the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished'. This makes it clear that the Legislature was conscious of the fact that the expression 'in the manner' would denote only the mode in which an act was to be done, and if any time-limit was to be prescribed for the doing of the act, specific words such as 'the time within which' were also necessary to be put in the statute. In Stroud's judicial Dictionary it is said that the words 'manner and form' refer only 'to the mode in which the thing is to be done, and do not introduce anything from the Act referred to as to the thing which is to be done or the time for doing it'.........." We are of the view that the aforesaid analysis of the position does not support Mr. Misra's contention. On the other hand, learned standing counsel's contention is supported by the analysis. Sub-section (8) of section 12 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. The assessee may have suppressed a part of the turnover as a result whereof there may be an escape of that part of the turnover from assessment. Where the taxing officer comes to hold that a part of the turnover has escaped assessment on account of suppression of that turnover from the accounts, the accounts become liable for rejection and where the accounts are rejected, there is no other material on the basis whereof the assessment can be framed; a situation does arise in which the assessment has got to be completed according to the taxing officer's best of judgment. On a bare analysis of this type, Mr. Misra's contention could be thrown out. 7.. Several decisions had been placed before us supporting the rival contentions of the assessee and the department in this regard. We now propose to refer to the cases of both sides separately and ultimately indicate our view. We start with the assessee's cases. 8.. In State of Andhra Pradesh v. Ravuri Narasimloo[1965] 16 S.T.C. 54., the Andhra Pradesh High Court referring to the provisions of their Act stated: "The question that calls for determination in this case is whether the concept of best judgment could be imported int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial Tax Officer III, Dindigul[1966] 18 S.T.C. 357. While dissenting from an earlier Bench decision of their own court, D. Sreenivasappa v. State of Madras [1964] 15 S.T.C. 784. , and the Madhya Pradesh decision in Commissioner of Sales Tax v. Kunte Brothers[1962] 13 S.T.C. 366., and approving the decision of the Andhra Pradesh High Court in the case of State of Andhra Pradesh v. Ravuri Narasimloo[1965] 16 S.T.C. 54., the Full Bench came to hold: "It has been contended for the State that power to assess would include also power to assess by best judgment. But in the context of the other provisions like sections 12 and 13 and the legislative history which we referred to, it is not possible to accept this contention. In a taxing statute, like any other statute, we are concerned with the express language used and there is hardly any room for implication in the section of power which is not there expressly given, for, the same statute clearly shows that wherever a power to assess by best judgment is contemplated, it is expressly given. The result of the contrast of the language of sections 12 and 13 with that of section 16(1) and the legislative history we referred to necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be relied upon to show the whole of the trading profits. The Commissioner was able to prove only one incident of escaped assessment. In these circumstances, it was observed by Danckwerts, J., as follows: "It is perfectly true that this is only one incident, and the one incident only, which the Inspector of Taxes was able to establish before the Commissioners; but it was open to the Commissioners, as it seems to me, to conclude that this was not merely an isolated transaction but showed the kind of thing which was going on, and they were, in my view, entitled to come to the conclusion to which they did come from this incident, though one only, that there must have been other similar incidents and, therefore, that the accounts of the company could not be relied upon to show the whole of the trading profit of the company.' These observations show that an estimate of escaped turnover or income can be made if the assessee fails to produce his account books or if the account books are found to be unreliable by the taxing authority.........." In D. Sreenivasappa v. The State of Madras[1964] 15 S.T.C. 784., a Bench of the Madras High Court dealing with the position stated: "..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be drawn by the department from certain circumstances; and that it does not clothe the department with power to make a best judgment assessment.......... It is important to note while dealing with this judgment of the Andhra Pradesh High Court that section 15 of the Bombay Sales Tax Act, 1953, provides in connection with the reassessment proceedings that after the issue of the notice contemplated by section 15(1), the assessing authority may proceed to assess or reassess the amount of tax due from such dealer and the provisions of the Act are to apply accordingly as if the notice were a notice served under section 14(3) in respect of the original assessment. By virtue of those words occurring at the end of sub-section (1) of section 15, the Bombay Legislature has provided that so far as all stages after the issue of the notice are concerned, the original assessment proceedings and the reassessment proceedings are to stand on the same footing and in both proceedings the authority concerned has to follow the same procedure. Therefore, the, power of best judgment, which can be exercised in respect of original assessment can be exercised in respect of reassessment proceedings also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in M/s. Pooran Mal Kapoor Chand's caseS.T.R. No. 147 of 1957 decided on 30th July, 1963., where it had been stated: "It seems to us that the learned Chief Justice did not, at the time when he made these observations, have in mind the facts of a case such as the one before us. If the whole basis of the original assessment is unsound, and it is found that the turnover has escaped assessment, we see no reason why the Sales Tax Officer should not be entitled to reopen the original assessment and reassess the turnover. We do not see why the right to make an assessment to the best of his judgment should be denied to him in such a case." Then comes the decision of the Patna High Court in the case of Mittal Company v. State of Bihar[1969] 24 S.T.C. 418. Sinha, J. (as the learned Judge then was), speaking for the Division Court stated: "It seems that the Bihar Act of 1959 includes 'best of judgment' assessment in a proceeding under section 18 of the Act. According to that section the prescribed authority has to serve on the dealer a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 16 and proceed to assess or reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion and in the absence of any fresh definite material. However, if some definite material comes into the possession of the department, which warrants a higher addition to the disclosed turnover than the one originally made on best judgment basis, it is open for the department to do so. But, in such a case, it is only just and proper that the addition already made in the original assessment must be deducted out of the addition which is proposed to be made under section 21. That is not a rule of law but merely a rule of common sense." This decision does not fully support the contention of Mr. Misra. It is true, and the learned standing counsel does not dispute it, and we must say fairly, that in respect of the suppression from the same source there cannot be two best judgment assessments, particularly when there is no fresh, definite material of suppression while proceeding to complete the second best judgment assessment. A Bench of the Mysore High Court in S.K. Kalanji v. Commissioner of Commercial Taxes[1972] 29 S.T.C. 724. has rightly repelled the proposition of law advanced by Mr. Misra by saying: "Sri B. V. Katageri, the learned counsel for the assessee, contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account the original estimate and confined the total estimate to Rs. 4,000, i.e., Rs. 2,000 as found on the first occasion and Rs. 2,000 by way of estimates at the reassessment stage. The Tribunal has confined the addition at the reassessment stage to the exact suppression found. In a given set of facts what would be the exact estimate would ordinarily be a question of fact. Unless the estimate made is arbitrary and without reference to any material on record, no question of law can arise out of such an assessment. In the present case, the Tribunal has accepted the assessee's contention that in the previous enhancement in the regular proceeding, the present suppression could have been accounted for. As we find, the two suppressions are on the same account. On the earlier occasion the estimate of Rs. 2,000 was made when the suppression found was to the tune of Rs. 37.05, it was on the footing that there were similar other suppressions in the purchase account which could reasonably be estimated at Rs. 2,000. The actual suppression found at the reassessment stage being to the tune of Rs. 232.05; it is quite possible that this could have been accommodated in the estimate made in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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