Decided on July 20,1973



R.N.MISHRA, J. - (1.) UNDER section 24 (1) of the Orissa Sales Tax Act (briefly referred to as the "act"), the Member, Additional Sales Tax Tribunal, Orissa, has referred the following question for determination of this court : " Whether, in the facts and circumstances of the case, the Tribunal was right in rejecting the prayer of the applicant to summon the third party for confrontation when reliance was placed on the accounts and also statement of the third party, which was not recorded in the presence of the applicant assessee ? Whether assessment made in such circumstances would be valid ?"
(2.) THE manner in which the question posed to this court for answer arose may now be recounted. The assessee is a dealer carrying on business at Rourkela and was assessed to sales tax under section 12 (4) of the Act for the assessment years 1962-63 and 1963-64 by the Sales Tax Officer, Rourkela Circle at Uditnagar. During the assessment proceedings from some seized books of account of Messrs. Sitaram Jaiswal, some transactions were found to have been carried on between the assessee and that firm. On cross verification, the following four transactions were fond in the assessee's accounts : ------------------------------------------------------------------------ Serial number Date Amount ------------------------------------------------------------------------ 1. 1-12-1962 Rs. 1,500 2. 13-1-1963 Rs. 2,000 3. 10-2-1963 Rs. 1,561 4. 13-4-1963 Rs. 300 ------------------------------------------------------------------------ This fact was put to a partner of the assessee's firm and the assessing officer was not satisfied with the explanation offered by him about the absence of the corresponding entries for these four transactions in the assessee's accounts. The partner of the assessee's firm had stated to the assessing officer that the transactions may have been with the firm of Messrs. Panalal Banwarilal and not with the assessee-firm, which is known as "banwarilal Sitaram". The Sales Tax Officer stated in his order : ". . . . . . . . . . This contention of the dealer cannot be accepted in view of the fact that it has been ascertained from official sources that these financial transactions have been made with this firm in the usual course of business. These payments have been received by them towards satisfaction of dues relating to their credit sales. In the face of this authentic evidence as available in the records, I am not prepared to accept the contention of the agent of the dealer, when these transactions have not been noted in their books of account. So I reject the accounts of both the years. . . . . . " As the assessee was maintaining accounts according to the Rama Nabami year and the suppression related to both the accounting periods, the accounts of both the years were rejected and the assessments were completed according to the Sales Tax Officer's best of judgment. Before the first appellate authority, the assessee claimed to have the opportunity of cross-examining the representative of Messrs. Sitaram Jaiswal, who had given a statement before the assessing officer. Admittedly, the official source referred to in the order of the assessing officer (extracted above) related to the evidence collected from a representative of the firm of Messrs. Sitaram Jaiswal behind the back of the assessee. The Assistant Commissioner of Sales Tax negatived this claim of the assessee by saying : ". . . . . . In this connection it is pertinent to mention that it has been admitted by both Sitaram Jaiswal and the appellant that they have regular business transactions with each other. Further Sitaram Jaiswal has categorically stated that by Banwari and Harikishan, he means Banwarilal Sitaram (the appellant) of Old Station Road, Rourkela. In the face of such clear admission by Sitaram Jaiswal, the onus lies of the appellant to prove that the transactions do not relate to him. Since he has failed to prove the stand taken by him, the Sales Tax Officer has rightly held that the transactions in question related to the appellant's business transactions with Sitaram Jaiswal. Again, when the appellant did not press for confrontation of Sitaram Jaiswal at the assessment stage when the transactions were put to him, I am not inclined to concede to his request for summoning Sitaram Jaiswal for the purpose of confrontation at my stage. . . . . " In second appeal before the Additional Sales Tax Tribunal, the assessee pressed the same contention. The assessee's claim was negatived in second appeal by saying : " It is an admitted fact that Sitaram Jaiswal of Lahunipara had business transaction with the assessee-firm. In his statement before the Sales Tax Officer on 20th July, 1965, Sitaram Jaiswal admitted that he had 7 transactions with the assessee-firm and he made payments as noted above. At the stage of assessment, these transactions were confronted to the assessee-appellant and he denied to have any such transaction with Sitaram Jaiswal on the above dates. But at that stage the assessee-appellant did not ask for confrontation of Sitaram Jaiswal. The only plea taken by him was that these payments might relate to some other Banwarilal Agarwalla of Rourkela. But this plea contains no substance in view of the clear admission of Sitaram Jaiswal that by Banwarilal Harikishan he meant Banwarilal Sitaram, the assessee-appellant of Old Station Road, Rourkela. So, these transactions cannot (sic) relate to the business of the assessee-appellant and the assessee-firm suppressed these transactions from his books of account. Before the Assistant Commissioner of Sales Tax and also before the Tribunal the assessee-appellant had moved for summoning Sitaram Jaiswal for the purpose of confrontation. But no such step having been taken at the stage of assessment, I do not think it is desirable to allow the prayer of the assessee-appellant at this stage. " In the order of assessment the Sales Tax officer nowhere stated that he had informed the assessee at any stage before completing the assessment that he had collected a statement from Sitaram Jaiswal in relation to the impugned transactions. The assessment order only says that the assessee was confronted with the entries in the books of account. As the learned standing counsel contended before us that the assessee must have notice of Sitaram Jaiswal's statement while accounts were being checked by the assessing officer, we requested him to produce the records of assessment and the records have been placed before us. Learned standing counsel on verification of the record has fairly conceded that there is no material on record to show that the assessee had notice of such a statement having been recorded from Sitaram Jaiswal. If the Sales Tax Officer never indicated to the assessee that he had with him such a statement, the first time when the assessee could press for confrontation was the first appellate stage because he must have been aware of the utilisation of such a statement after seeing the order of assessment. The first appellate authority was, therefore, not correct in rejecting the claim for confrontation by saying that at the appropriate stage it had not been pressed. When the first appellate authority had improperly rejected the prayer on an untenable ground, the Additional Tribunal could not have taken the view : " I do not think it is desirable to allow the prayer of the assessee-appellant at this stage. "
(3.) A lot of reliance has been placed on the statement of Sitaram Jaiswal by all the authorities. The ambiguity that existed regarding identity of the dealer with whom Sitaram Jaiswal had carried on the impugned transactions was said to have been removed beyond doubt on account of the unambiguous and clear evidence of Sitaram Jaiswal identifying the dealer with whom the transactions had taken place. If that oral evidence was not available, quite possibly, merely on the entries in the account books, the Sales Tax Officer may not have rejected the accounts of the assessee by finding suppression. It is the evidence of correlation that has mattered. Thus, the statement of Sitaram Jaiswal is a very important piece of evidence, that is, this statement though the Sales Tax Officer was going to utilise against the assessee was not disclosed to the assessee and he did not have the opportunity of meeting the adverse material contained in such evidence. When the assessee made a grievance of this situation before the first appellate authority and having appealed before the second appellate authority, they turned down the assessee's request by saying that the claim for confrontation had not been made at the appropriate time.;

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