9911796707
TMI Blog1995 (9) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... f the value of Rs. 8,38,631.18. The facts in brief are as follows: The assessment relates to the assessment year 1982-83 under the Act. She was a registered dealer under the Act at the relevant time and the goods in respect of which she was shown as a dealer was cement. For the business she did in cement, for the assessment year 1982-83, she filed a return showing a turnover of Rs. 36,000 and claimed exemption. Her claim was accepted and nil assessment order was made on September 8, 1984, which was received by her on September 8, 1984 itself. On July 9, 1985, a search of her business and residential premises was conducted during which it was found that during the period January 4, 1982 to March 31, 1983, she made purchases of photographic goods from one M/s. Keshoram Surendranath of Bombay to the tune of Rs. 8,38,631.18 and that she issued form C declarations in respect of the said purchases. The concerned Commercial Tax Officer, in exercise of his powers under sub-section (4) of section 14 of the Act, issued notice dated May 13, 1986, to her to show cause why a turnover of Rs. 10,90,220 should not be brought to tax as suppressed turnover of sales that figure was arrived at by ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation also. What all the assessing authority has computed is based on facts and figures and no guess-work is involved. At point Nos. 9 and 10 of the grounds of appeal, it was urged that the purchased goods were fully used to meet the laboratory work in making ordered specific photos, to its customers. This is again an interesting point. The appellant is a registered dealer in cement and the assessment was completed on nil turnovers by the Assistant Commercial Tax Officer, General Bazar, Secunderabad and it is not known as to how these purchased goods were used in the laboratory for making photos, when the appellant is a dealer in cement. The act of non-vouching for of the transactions in the books of accounts; and the use of the 'C' forms for purchase of goods in which the appellant is not a dealer clearly establish the mens rea of the assessee in suppression of turnovers and thereby to evade legitimate taxes due to the States exchequer. More so the indiligent attitude of the appellant in getting the case disposed also lends support to this view." Before the Tribunal the two points urged by the petitioner herein and which arose for consideration were firstly whether the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded that the appellant could have sold away the photographic goods purchased from outside the State. It is only because the appellant has no intention of explaining how the goods were disposed of, it has not accounted for the purchases, as otherwise there was no need to suppress from disclosure the purchases made. It is not possible to accept the contention that the Commercial Tax Officer's assessment was a wild guess." The Tribunal however, reduced the estimated profit from 30 per cent to 15 per cent and on that basis arrived at the sale value of the said photographic goods as Rs. 9,64,425 and allowed the appeal to the extent of limiting the estimated turnover to that figure and upheld the assessment on that turnover. On the first point, the learned counsel for the petitioner contends before us also that the orders of the Commercial Tax Officer and the Appellate Deputy Commissioner are liable to be set aside on the ground that no reasonable opportunity was given to her. We are unable to find any substance in this contention. The facts disclose that adequate opportunity was given to the petitioner herein by the said authorities but that the petitioner did not avail of that oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notices two for the two years (1982-83 and 1983-84)-Two vakalats filed-Requested time for filing objections-No date of hearing fixed and intimated-Preliminary objections hereby filed." The learned counsel for the petitioner has no explanation whatsoever for not filing these objections for five months even after appearance of the counsel was filed on July 3, 1986. Admittedly, in the show cause notice dated May 13, 1986, the petitioner was asked to file her objections within 15 days from the date of receipt of the notice-she received the notice on May 14, 1986-and she was also requested to peruse the detected records with the department; that time expired on May 29, 1986. On that last day a letter was filed on behalf of the petitioner stating that she was expected to be back by June 15, 1986. In the second notice dated June 20, 1986, while stating that the matter was posted to July 3, 1986, the petitioner was told unequivocally that no further adjournment would be granted. Therefore, the petitioner had no excuse whatsoever for not filing her objections by July 3, 1986. In fact, she has not come forward with any explanation for not filing her objections by July 3, 1986 when the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unity has been reasonable...... There can be no invariable standard for 'reasonableness' in such matters except that the court's conscience must be satisfied, that the person against whom an action is proposed has had a fair chance of convincing the authority who proposes to take action against him that the grounds on which the action is proposed are either non-existent or even if they exist they do not justify the proposed action. The decision of this question will necessarily depend upon the peculiar facts and circumstances of each case, including the nature of the action proposed, the grounds on which the action is proposed, the material on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause against such proposed action, the nature of the plea raised by him in reply, the requests for further opportunity that may be made, his admissions by conduct or otherwise of some or all the allegations and all other matters which help the mind in coming to a fair conclusion on the question." (Emphasis* supplied). In Govinda Chandra Mohanty v. Commissioner of Sales Tax [1990] 77 STC 209 (Orissa), the petitioner in a writ petition a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of Writ Petition No. 3341 of 1987 and on March 17, 1987 itself, this Court directed the Appellate Deputy Commissioner to dispose of the appeal before him expeditiously and that no coercive steps should be taken for the recovery of the amount assessed. In view of that order, one would expect the petitioner herein to co-operate with the Appellate Deputy Commissioner in hearing and disposing of the appeal before him without delaying and procrastinating the matter. After receiving the order of this Court in Writ Petition No. 3341 of 1987, the Appellate Deputy Commissioner posted the appeal of the petitioner herein for hearing on March 31, 1987 and then adjourned to April 9, 1987 to effect proper service of the date of hearing on the petitioner herein. It is not in dispute that the appeal was preferred on behalf of the petitioner herein by her counsel, i.e., Sri A.V.S. Ramakrishnaiah who is appearing before us now. In spite of that, an employee of the proprietrix filed a petition on April 9, 1987, seeking adjournment by two weeks before the Appellate Deputy Commissioner and the appeal was adjourned to April 23, 1987. As the notice could not be served, the matter was once again p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential'; Hanson v. Church Commissioners for England (1978) QB 823, 838, per Roskill, L.J." But the learned author also observes: "A party who has had lengthy notice of proceedings cannot expect to obtain an adjournment as of right by producing at the very last moment an excuse such as an objection, based on religious grounds, to attending a hearing on a particular day............ Nor can a party claim an adjournment, as of right, if he would not have required the delay had he taken the trouble to observe the appropriate rules of procedure of the Tribunal or other body in question....." In Pawan Steel Corporation v. Commissioner of Commercial Taxes [1991] 83 STC 148 (WBTT) the Commercial Tax Officer granted several adjournments earlier and when he did not allow the verbal prayer for adjournment on a day finally fixed for hearing and completed the assessment presumably because there was only one month left for completing the assessment, that was questioned before the West Bengal Commercial Taxes Tribunal. That Tribunal upheld the assessment. On the question whether that Tribunal was right in holding that reasonable opportunity of being heard had been allowed to the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing that "no previous intimation had been given of the intention of the officer to refuse a further adjournment on October 19, 1931, which they characterised as a failure to observe an elementary rule" and that the assessee had shown sufficient cause being sick. Disagreeing with that view, Lord Russell of Killowen, delivering the judgment of the Board, observed: "...........And their Lordships are unaware of any rule by which the officer was bound or ought to announce beforehand how he proposes to deal with an application for an adjournment. The respondent (assessee) had already obtained one adjournment from September 14, 1931, until October 19, 1931. It was his duty if he desired a further adjournment to apply at a date sufficiently early to enable him, in the case of a refusal, to be prepared to proceed on the appointed day. In fact the respondent delayed his application for a further adjournment until the very day appointed for compliance with the order. Even if this could be said to be a case of exercising a judicial discretion, their Lordships can see no ground on the facts of this case for suggesting that it was wrongfully exercised." In the present case, the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o turnover that escaped assessment. The learned counsel contends that the burden was on the department to establish that there were sales of the photographic material purchased by the petitioner and that that burden was not discharged in the present case and that therefore the impugned best judgment assessment has to be set aside. We are not inclined to agree. On the facts of the present case, it is clearly on the petitioner to establish what she did with her photographic goods purchased from Bombay availing "C" forms and to produce material to establish her case. The petitioner merely stated that the photographic goods were utilised by her husband in his studio in his profession of photography, as she had no studio of her own and that she was doing the business of photography undertaking contracts in that regard. But the mere ipse dixit of the petitioner would not suffice. Even before the Tribunal, the petitioner had not produced any material for substantiating her case in a convincing manner. The learned counsel for the petitioner relies on the judgment of the Supreme Court in Assistant Sales Tax Officer v. B.C. Kame [1977] 39 STC 237, wherein it has been held that when a photog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner "(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority" (Emphasis* supplied). That form is prescribed under sub-rule (1) of rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 and is called form "C". Form "C" is issued in triplicate-counterfoil, duplicate and original; the counterfoil is to be retained by the purchasing dealer. The "C" form provides for a declaration as follows: "Certified that the goods..............** ordered for in our purchase order No............ dated.........and supplied as per bill/cash memo/challan No........dated............as stated below purchased from you as per bill/cash memo/challan No.......dated........as stated below supplied under your challan No......dated........are for **resale/use in manufacture/processing of goods for sale/use in mining/use in generation/distribution of power/pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed part of the actual stock of goods, unless there was evidence to show that the stock said to have been purchased had been actually sold during the assessment year as the goods in question attracted tax at the point of first sale, the same could not be reckoned as forming part of the turnover; and that the said disclosure in order to attract the sales tax, the department was obligated to establish by evidence that it pertained to the sales of the goods purchased and that too during that assessment year and as that was not established it would not be within the purview of the Revenue to add the disclosed income to the total turnover of the assessee. In holding so, this Court relied on the decision of the Supreme Court in Girdhari Lal Nannelal v. Sales Tax Commissioner [1977] 39 STC 30. That case arose under the Madhya Pradesh General Sales Tax Act, 1958. The appellant before the Supreme Court was a dealer under that Act. While determining the taxable turnover of the appellant for the accounting year 1950-51, the assessing authority took into account a sum of Rs. 10,000 in respect of which there was a cash credit entry in the account books of the appellant in the name of the wife of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not justify the conclusion that the sum in dispute represents profits of the firm derived from undisclosed sales." We are of the view that these decisions are not attracted to the facts of the present case. What we are concerned with in the present case is not a cash credit or suppressed income. The question in the present case is as to how the petitioner dealt with the photographic goods, admittedly purchased by her from Bombay misusing the "C" forms. She claimed that she used them for her photographic business, which was not disclosed by her earlier and in respect of which she did not register herself under the Act. She did not produce any material whatsoever to establish that she was having any photographic business even before the Tribunal. When she had failed to establish that plea, the only other conclusion that could be drawn is that she sold the said goods and suppressed the sales and the turnover relating to the said sales. There is no other third possibility on the facts of the present case. That conclusion gains support from the fact that she misused the "C" forms for the purchases of the photographic material in question without registering herself in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of 'best judgment' assessment. The assessee cannot be permitted to take advantage of his own illegal acts. It was his duty to place all facts truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove conclusively what turnover he had suppressed. That fact must be within his personal knowledge. Hence the burden of proving that fact is on him.......... The task of the assessing authority in finding out the escaped turnover was by no means easy. In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the 'best judgment' assessment, no doubt, should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his 'best judgment' and not of anyone else. The High Court could not substitute its 'best judgment' for that of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not fettered by technical 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)." The application of those principles for the purposes of the present case is well illustrated by the decision of a Division Bench of this Court in Subbaiah v. State of A.P. [1980] 46 STC 492. In that case also, in the course of a search conducted by the authorities, ten account books and six bundles of account slips were recovered from the residence of the assessee. They disclosed the business dealings carried on by him during the assessment years 1963 to 1969; they related to transactions, which according to the assessing authorities, attracted tax under the Act. The assessee admitted before the assessing authority that the jottings in the account books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent was justified in raising a presumption that the petitioners sold goods in the State of Maharashtra and they were to be prima facie roped in as dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959. In fact, the petitioners admit that they imported the goods at the Bombay Port, but they claim that they have removed the goods from Bombay to their business place at Salem. This is a matter which has to be established by acceptable proof adduced by the petitioners. It may be that the quondam firm disposed of the other licences in a manner claimed by them. But in so far as the goods imported by them at Bombay are concerned, the onus is upon them to establish that they did not deal with the goods in Bombay and they removed the same for their own purposes to their business place in the district of Salem. Paragraph 5 of the affidavit in support of this writ petition clearly reflects on the conduct of the petitioners. They would admit that goods were despatched by lorry from Bombay to Salem and were covered by lorry receipts, etc. This has to be established with reference to their accounts and not by mere personal representations as was sought to be don ..... X X X X Extracts X X X X X X X X Extracts X X X X
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