Decided on September 08,1955

State Of Andhra Respondents


SATYANARAYANA RAJU,J. - (1.)This is a revision filed by the assessees against the decision of the Sales Tax Appellate Tribunal in T.A. No. 225 -A of 1953. The petitioners are a firm of dealers in kirana articles at Eluru. They have two departments of trade, one wholesale and the other partly wholesale and partly retail. For the year of assessment 1952 -53, they submitted a total turnover of Rs. 6,35,122, made up of Rs. 1,44,442 from the wholesale department and Rs. 4,90,680 from the partly wholesale and partly retail department. The petitioner's shop was inspected by the Special Assistant Commercial Tax Officer and he found that all the sales were not brought into account. He discovered three sales written on slips of paper in the year 1952 -53, which did not find a place in the accounts. For the year 1953 -54, he found that such sales written on slips of paper, but which were not brought into account, were more than 70 in number. A notice was issued that the net turnover would be determined to the best of judgment. The petitioners sent their reply to the notice. After the reply was received, it was considered and the Deputy Commercial Tax Officer, in his order of assessment, determined the net turnover finally for 1952 -53 as follows : -
Rs. A. P. 1. Gross turnover as per the accounts ... 9,30,559 13 6

2. Deduct the sales of taxed tobacco and returned goods ... 2,95,438 0 0

- - - - - - - - - - - - - - - - 3. Balance ... 6,35,121 13 6

4. Add the estimated value of 10 bags of sugar which were sold and which were not shown as sold at Rs. 87 -8 -0 a bag ... 875 0 0

- - - - - - - - - - - - - - - - 5. Total ... 6,35,996 13 6

6. Add 6.5 per cent for incorrect maintenance of the accounts on account of the reasons stated above ... 41,340 0 0

- - - - - - - - - - - - - - - - 7. Net turnover ... 6,77,336 13 6 - - - - - - - - - - - - - - - -
The petitioners were finally assessed on this turnover to a sales tax of Rs. 10,583 -6 -3.
(2.)The assessees preferred an appeal to the Commercial Tax Officer. The Commercial Tax Officer held that the Deputy Commercial Tax Officer was not justified in utilising the material relating to 1953 -54 for enhancing the turnover of 1952 -53. He characterised this as both unjust and unwarranted and allowed the appeal in part. While the Deputy Commercial Tax Officer estimated the margin of profit for the business of the petitioners at 12 per cent, the Commercial Tax Officer added the difference of 6.5 per cent (the difference between the actual profit shown as per the accounts and the estimated profit of 12 per cent). The Commercial Tax Officer restricted the addition of 6.5 per cent to the turnover of retail sales and fixed the addition of Rs. 31,893 as against Rs. 41,340 adopted by the Deputy Commercial Tax Officer.
(3.)By a majority judgment, the Sales Tax Appellate Tribunal held that the addition of 5 per cent profit would meet the ends of justice and accordingly fixed an addition of Rs. 24,534 -0 -2 in the place of Rs. 31,893 estimated by the Commercial Tax Officer. The Chairman of the Sales Tax Appellate Tribunal, in a dissenting judgment, held that there was no data made available justifying the addition of either 6.5 per cent by the Commercial Tax Officer or the addition of 5 per cent instead, by his colleagues. Rule 8 of the Sales Tax Turnover and Assessment Rules reads as follows : -
"If no return is submitted by the dealer as required by rule 6 or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment, and fix provisionally the annual tax or taxes payable at the rate or rates specified in section 3 or 5 or notified under section 6(1)".


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