Orissa High Court
State Of Orissa vs Tormal Rameswardas on 11 December, 1986
Equivalent citations: [1988]68STC204(ORISSA)
JUDGMENT S.C. Mohapatra, J.
1. In this reference under Section 24(1) of the Orissa Sales Tax Act, 1947 (for short "the Act") on the application of the Revenue statement of the case has been made on the following question:
Whether, on the facts and in the circumstances of the case, the Sales Tax Tribunal was correct in reducing the assessment to the returned figures instead of remanding the case to the assessing officer for allowing a further opportunity to the opponent to cross-examine the witness or/and examine the seized accounts ?
2. In spite of valid service of notice, the dealer has not preferred to appear in this Court and the learned Standing Counsel, Commercial Tax Department was heard in the matter.
3. The facts giving rise to this reference are to the effect that the dealer not having furnished the returns on due date, assessment was completed under Section 12(4) of the Act to the best of judgment of the assessing officer. For the purpose of completing the assessment to the best of judgment, the assessing officer relied upon suppression of purchases and sales. One of the suppressions is based on a report of the Commercial Tax Officer, Intelligence Wing, Sambalpur, where it was stated that while verifying the books of accounts of M/s. Nandalal Narayan Prasad of Jharsuguda, he seized four khatas and four sheets of paper showing that the dealer made business transactions with M/s. Nandalal Narayan Prasad which is not reflected in the books of account of the dealer. When he verified the accounts of the dealer on 11th April, 1975, the latter denied the transactions. During assessment, the dealer requested to examine the seized accounts of M/s. Nandalal Narayan Prasad which was not complied with. Relying upon the report of the Commercial Tax Officer, Intelligence Wing, indicating suppressions by the dealer, his books of accounts were rejected. The assessing officer took into consideration the reputation of the dealer in the locality, length of the period of business and the volume of suppression. The turnover was enhanced by 5 per cent of the returned figure. In appeal, this was the main attack against the rejection of the books of accounts which was not accepted and the assessment was confirmed. In second appeal before the Tribunal, the learned Member allowed the appeal and reduced the turnover to the returned figures on the ground that lack of opportunity to the dealer to examine the seized accounts would amount to violation of the principle of natural justice and the same cannot be relied upon for the purpose of completing best judgment assessment. This is the subject-matter of the present reference.
4. Assessment on the basis of accounts and the assessment to the best of judgment are two different categories. Sub-sections (1) and (2) of Section 12 of the Act deal with the assessment to the best of judgment. Sub-section (3) thereof provides that in case all the terms of the notice for assessment under Sub-section (2) are not complied with, the assessment can be completed to the best of judgment. Thus, Sub-section (3) provides for examination of accounts and rejection thereof for the purpose of completing the assessment to the best of judgment. Sub-section (4), however, contains the legislative mandate for best judgment assessment. The dealer is only to produce evidence in support of the return. In this case, the dealer produced his books of accounts in support of the return which have been rejected on the basis of the report of the Commercial Tax Officer, Intelligence Wing, to the effect that the dealer had transactions with M/s. Nandalal Narayan Prasad of Jharsuguda which is not reflected in the books of account of the dealer. Once existence of such a report is not disputed, it is the burden of the dealer to prove to the satisfaction of the assessing officer that there is no such transaction as alleged. The dealer did not claim that the books of account seized did not contain entries of such transaction. For the said purpose, he could have examined the representatives of M/s. Nandalal Narayan Prasad in support. Instead, he wanted examination of the seized accounts throwing the burden on the department to prove that there was transaction. Where it is the burden of the dealer to support his return, failure to produce the seized accounts even if requested for the same would not by itself amount to violation of the principle of natural justice, if the dealer could have proved his assertion otherwise.
5. Assessment to the best of judgment is bound to have some estimate which would be a guess-work. In the estimation, there may be some overestimate and underestimate. That would not be sufficient for questioning the determination of the amount of tax payable by the dealer as determined to the best of judgment. The term "to the best of judgment" of the assessing officer would envisage his judgment. Where the estimate is on account of arbitrariness, vindictiveness or capriciousness of the assessing officer, it cannot be said to be his judgment. There is no such allegation in this case. Accordingly, the estimate based on the reputation of the dealer in the locality, the length of the period of his business to enhance the return turnover by 5 per cent only cannot be said to be without any nexus when that aspect of the matter is also not challenged. Reputation and the length of period of business would be sufficient nexus in the peculiar circumstances of this case, although, the assessing officer would have done well in taking into account the turnovers of the previous years, for the purpose of estimation.
6. In the result, the answer is to be given in favour of the department to the effect that in the facts and circumstances of the case, the Tribunal was not correct in reducing the assessment to the returned figures. When there is a guess-work, the Member of the Sales Tax Tribunal on the basis of the materials available would have himself estimated the turnover and remand of the case to the assessing officer was not necessary to give further opportunity to the dealer to cross-examine the witnesses and to examine the seized accounts. No costs.
H.L. Agrawal, C.J.
7. I agree.