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TMI Blog1976 (3) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... While this appeal was pending, the Enforcement Branch raided the place of business of the respondents and seized certain books of account for S.Ys. 2014 to 2018, which books had not been produced by the respondents in their assessment for the said period of S.Ys. 2014 to 2018. The books produced by them in their assessment proceedings for the said years being a different set, the figures appearing in them did not tally with the figures appearing in the books seized by the Enforcement Branch. Thereupon, on 11th March, 1964, the Assistant Commissioner of Sales Tax (II), Enforcement, Bombay City Division, issued to the respondents a notice under form XIV to the Bombay Sales Tax (Procedure) Rules, 1954, stating that he was satisfied that the sales of the value of Rs. 2,28,273 and purchases of the value of Rs. 2,14,912 for the period 19th September, 1956, to 31st March, 1957, had escaped assessment. By the said notice, he directed the respondents to attend in person or by a legal practitioner or an agent authorised in writing to attend at his office at the time and place specified in the said notice and to show cause as to why the amount of tax payable by the respondents in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and that such authority was not competent to make an estimate of the escaped turnover according to its best judgment. The Special Bench arrived at its decision that the reassessing authority was not competent to make a best judgment assessment on a comparison of the provisions of sections 14 and 15 of the said Act and relying upon the judgment of the Andhra Pradesh High Court in State of Andhra Pradesh v. Ravuri Narasimloo[1965] 16 S.T.C. 54. and a judgment of the Full Bench of the Madras High Court in P.S. Subramaniam Chettiar Sons v. Joint Commercial Tax Officer III, Dindigul[1966] 18 S.T.C. 357 (F.B.). With respect to the second question, the Tribunal held that it could not be presumed that the purchases were made from registered dealers and that any such claim by the dealer being reassessed had to be proved by him like any other fact. After the papers were sent back to the Regular Bench with the answers given by the Special Bench, following the judgment of the Special Bench that the reassessing authority had no jurisdiction to make a best judgment assessment, the Regular Bench by its judgment and order dated 22nd August, 1966, allowed the respondents' revision application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce as the dealer may produce and such other evidence as the Collector may require on specified points, assess the amount of the tax due from the dealer. (4) If a dealer having furnished returns in respect of a period fails to comply with the terms of the notice issued under sub-section (3), the Collector shall assess to the best of his judgment, the amount of the tax due from the dealer. (5) If a dealer does not furnish returns in respect of any period by the prescribed date, the Collector shall, after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment the amount of the tax, if any, due from the dealer. (6) If upon information which has come into his possession, the Collector is satisfied that any dealer has been liable to pay the tax in respect of any period but has failed to apply for registration, the Collector shall, after giving the dealer a reasonable opportunity of being heard, assess to the best of his judgment, the amount of the tax, if any, due from the dealer in respect of such period and all subsequent periods. (7) In cases where the Collector, while making an assessment under sub-section (6), is satisfied that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the notice. The Bombay Sales Tax (Procedure) Rules, 1954, give the form of a notice to be issued under section 14(3) and a notice to be issued under section 15. The form of a notice under section 14(3) is given in form XIII appended to the said Rules, while the form of a notice under section 15 is given in form XIV to the said Rules. The notice in form XIII requires the officer issuing the notice to set out first why the notice is being issued and then to direct the dealer to attend in person or to produce his evidence as also to furnish certain information. Form XIV, which is the form of the notice under section 15, is as follows "To .....................................of...................................... Registration No......................................... Whereas I am satisfied that *your turnover in respect of the following* sales and purchases, namely: .................................................................................... for the period from..............to..........................has *escaped assessment/been under-assessed/been assessed at a lower rate, and *deductions for the following *sales and purchases, namely: ........................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and that the turnover on which he is liable to be taxed is the turnover as shown in his returns. The evidence which a dealer is called upon to produce by a notice cannot obviously be false or fabricated evidence or evidence which is unworthy and unreliable. A notice in form XIV further requires a dealer to show cause why the amount of tax payable by him in respect of the sales and purchases, which are specified in the said notice as having escaped assessment, should not be assessed or reassessed. Now, under clause (b) of sub-section (3) of section 14, after giving a hearing to the dealer, the assessing authority, after considering such evidence as the dealer might produce and such other evidence as the assessing authority might require on specified points, is to assess the amount of the tax due from the dealer. This implies that when an assessing authority proceeds under section 14(3)(b), it is satisfied that the evidence produced by the dealer is genuine and true, that his books of account are true and correct and that the returns which he has filed are correct. Under sub-section (4) of section 14, if a dealer who has furnished returns in respect of a period fails to comply with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at case, a best judgment assessment was made under the Andhra Pradesh General Sales Tax Act, 1957. The Andhra Pradesh High Court held that the legislature had confined the power of the department to assessing such turnover as was shown to have escaped assessment and had not extended it to estimates depending upon inferences to be drawn by the department from certain circumstances and that it did not clothe the department with power to make a best judgment assessment. A similar view was taken of the relevant provisions of the Madras General Sales Tax Act, 1959, by a Full Bench of that Court in P. S. Subramaniam Chettiar Sons v. Joint Commercial Tax Officer III, Dindigul[1966] 18 S.T.C. 357 (F.B.). The power of an authority assessing. escaped turnover came up for consideration of the Supreme Court in Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali[1973] 32 S.T.C. 77 at 85, 83 (S.C.)., a case of a best judgment reassessment under section 19 of the Madhya Pradesh General Sales Tax Act, 1958. Section 19 of the Madhya Pradesh Act did not in specific terms confer on an assessing authority the power to make a best judgment assessment. What that section specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment assessment. How these powers are to be exercised has itself been enunciated by the Supreme Court in Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali[1973] 32 S.T.C. 77 at 85, 83 (S.C.)., referred to earlier, in which the Supreme Court cited with approval the following classic passage from the judgment of Lord Russell in Commissioner of Incometax v. Laxminarain Badridas[1937] 5 I.T.R. 170 at 180 (P.C.).: "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 vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter, it must be honest gues ..... X X X X Extracts X X X X X X X X Extracts X X X X
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