R.N.MISRA, J. -
(1.) THE Member, Sales Tax Tribunal, Orissa, has referred the following two questions under section 24 (1) of the Orissa Sales Tax Act (briefly referred to as the Act), for our determination :
" (1) Whether, in a proceeding under section 12 (8) of the Orissa Sales Tax Act, there is scope for best judgment assessment ? (2) Whether, in the facts and circumstances of the case, the Member, Sales Tax Tribunal, is right in limiting the amount of escapement of the turnover to the actual amount of escapement detected ?"
(2.) THE short facts collected from the statement of the case made to this court are these : The assessee is a registered dealer dealing in electrical goods, automobile parts, wireless sets, furniture, etc. For the year 1966-67, it was assessed under section 12 (2) of the Act. While the assessing officer was dealing with the assessment of another dealer, on cross verification, a suppression of purchase in the assessee's account was noticed. The transaction took place on 11th 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 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 State of Orissa represented by the Commissioner of Sales Tax applied to the Tribunal to refer the following question of law to this court :
" Whether, in the facts and circumstances of the case, the learned Member, Sales Tax Tribunal, is right in holding that the amount of enhancement in a reassessment proceeding under section 12 (8) of the Orissa Sales Tax Act should be limited to the actual amount of escapement detected ?"
and the Member, Sales Tax Tribunal, has referred the two questions already extracted above to this court.
The original assessment completed under section 12 (2) of the Act on 24th June, 1968, was not on the record. During argument, the assessee's counsel provided us with copies thereof with the consent of the learned standing counsel. This order of assessment shows that the Sales Tax Officer came across a mistake in the accounts of the assessee. He held :
" On verification of the purchase register of the dealer for December, 1967, it was found by the Inspector that four dozens of 'no. 950' and one dozen of 'no. 935' Eveready batteries though purchased from Shri Mulji Ramjee of Rayagada on 9th December, 1967, on furnishing declaration has not been accounted for in the purchase account for December, 1967. The dealer was confronted with this report to which he explains that their mechanic Shri M. Laxmana Rao who brought it from Mulji Ramjee Kept the above batteries separately and has never told the dealer about the same and after the Inspector's detection, accounted for the said purchases worth Rs. 37. 05 in the month of January, 1968, which also appears to be an insertion in the purchase account. The explanation of the dealer is not the least convincing particularly because the mechanic is not the owner of the shop and even if he had brought the batteries from Shri Mulji Ramjee, the same must have been made over to the proprietor or partner of the shop and it is not expected that the batteries would lie undetected even till March, 1968. In fact, some of these batteries must have been sold during the period from December, 1967, to March, 1968. I therefore, reject the contention of the dealer. On account of the above anomalies, I consider it reasonable to enhance the gross turnover of the dealer by Rs. 2,000. . . . . . "
In the order made under section 12 (8) of the Act, the assessing officer stated :
" All purchases are claimed to be supported 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 Pongal, he gave some blank declarations signed by him to his brother Sri Ramakrishna Rao for purchasing goods necessary during his absence, and that during such a period Sri Ramakrishna Rao purchased those bulbs on 11th January, 1968, but forgot to enter the same in the purchase register. This contention appears to be incorrect in view of the fact that at the stage of original assessment, a similar purchase from a registered dealer was not accounted for as a result of which the accounts have been rejected. This is the second instance during the year 1967-68 and evidently, therefore, seems to be a habit with the dealer. The dealer next contends that it had no intention to suppress the purchases in view of the fact that it had duly accounted for sales and that the dealer having knowledge of such purchases being verified would not venture to suppress purchase intentionally. As already stated by me in para 1, the dealer is not maintaining a stock register to know the balance on hand. As such, it is difficult to know if actually the bulbs purchased on the strength of declaration have actually been sold. I can, on the other hand, say that the suppression was intentional since this is the detection for a second time of its kind for the same year. There is also the possibility of such goods being brought from Vizianagaram personally without being accounted for. In view of my above findings, I reject the books of account of the dealer and enhance the gross and taxable turnover by Rs. 6,000 each in addition to the enhancement of Rs. 2,000 made at the time of original assessment. . . . . . . . "
The first appellate authority agreed that the accounts were liable to be rejected. Dealing with the estimates to be adopted, it stated :
". . . . . . . In the instant case there is only one instance when the purchase involving a sum of Rs. 232. 05 was not accounted for in the books of account. For similar reasons an addition of Rs. 2,000 was made to the G. T. O. while passing the original assessment to cover up the probable omissions. In the present case there has been determination of escaped turnover to the extent of Rs. 6,000. Considering the single transaction pertaining to the purchase as indicated above, which was not accounted for, it would be fair and reasonable if the enhancement is limited to Rs. 4,000. The contention advanced in regard to the exclusion of goods taxable at 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.
(3.) 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.;