- (1.) BY this petition under sec. 14 of the Rajasthan Sales Tax Act, the petitioner M/s Ismail Allahbux seeks to vacate the appellate order of the Deputy Commissioner Sales Tax & Excise Udaipur dated 21. 4. 1961 as also the Sales Tax Officer's order dated 31. 3. 60 which was confirmed by the Deputy Commissioner's order dated 21. 4. 1961.
(2.) THE petitioner is a registered dealer as a grain merchant. For the assessment year 1955-56 he was, in the first instance, assessed for a taxable turnover of Rs. 24200/- as stated before us by the counsel for the petitioner. THE two orders under consideration do not disclose this figure at all. Subsequently one Rajab Ali made a complaint against the petitioner that he was a tax evader and also carrying on the business of a commission agent and was making false entries in his account books of the transactions of sales made by him on behalf of his clients. THE Sales Tax Officer thereupon made an enquiry, at the end of which he came to the conclusion that the petitioner was indeed a tax evader and that he was making wrong entries in his books. He, therefore, considered that a strong case was made out for re-opening his assessment under sec. 12 of the Rajasthan Sales Tax Act. He next proceeded to re-assess the petitioner. In this re-assessment the books of the petitioner were rejected and the petitioners total turnover in respect of taxable goods was estimated at the figure of Rs. 2,50,000/-and his net taxable turnover was fixed at the figure of Rs. 1,00,000/- (one lakh) vide his order dated 31. 3. 61. The petitioner appealed from this order but without success, as the learned Deputy Commissioner rejected the appeal by his order dated 21. 4. 60. It is under these circumstances that the petitioner has come before us in revision. The learned counsel for the petitioner has raised two contentions before us. In the first instance he argued that the enquiry which the learned Sales Tax Officer made was behind his back. The evidence which was mainly relied upon by the Sales Tax Officer consisted of certain accounts books kept by one Kalulal, but the petitioner was never confronted with them. This omission vitiates the enquiry and also the conclusions arrived at on its basis. Thus there was no case for re-opening the assessment. The second argument was that once the learned Sales Tax Officer had rejected the account books of the petitioner, he should have proceeded to make a 'best of judgment' assessment as required by sec. 10 sub-clause (4) (b) of the Rajasthan Sales Tax Act. This best of judgment assessment has to be made in accordance with certain principles of justice and not arbitrarily but the learned Sales Tax Officer had given no reasons, or pointed out the materials on the basis of which he made his assessment. The assessment therefore is not maintainable, Our attention has been invited to two decisions of the Kerala High Court reported in S. T. C. Vol. XII at page 273 and 502, to show to us what would be correct principles for an Officer making a 'best of judgment' assessment to bear in mind. We have made a critical assessment of the arguments submitted by the counsel for the petitioner, and have also referred to the two cases cited by him. Taking up his first argument we find nowhere in the order of the learned Sales Tax Officer dated 21. 4. 60 it has been mentioned that he confronted the petitioner with the account books of Kalulal Chittora. It was mainly on the basis of these books of Kalulal that the Sales Tax Officer believed the petitioner to be making false entries in his books. According to fundamental principles of justice this evidence should not have been used against the petitioner before giving him opportunity to contradict or offer a satisfactory explanation in regard to this evidence. But in view of the order we propose to make we will not pursue this argument in further detail and proceed to take up the petitioner's second argument which in our opinion prevails. Now even if it be assumed (we should not be understood to say that we hold this) for the sake of the argument that there was a case for re-opening of the assessment, there can be no escape from the fact that the reassessment should have been made on the basis of sound judicial principles. These principles were laid down by the Privy Council in Commissioner of Income-tax Vs. Laxmi Narain Badridas and were followed in the two decisions of the Kerala High Court referred to above. It is worthwhile to reproduce these principles in extenso. "the Officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information. He must not act dis-honestly or vindictively or capriciously; because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by an assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess work in the matter, it must be honest guess work. In that sense, too the assessment must be to some extent arbitrary". Now if we read the order of the learned Sales Tax Officer in the light of these principles we find that his order is in total non observance of them. The entire process of arriving at his own assessment has been disposed of in a few lines and the only justification for raising the taxable turnover of the petitioner from Rs. 24200/- or so to Rs. 100000/- (one lakh) given by the learned Sales Tax Officer is that the petitioner was found to be a tax evader. That might be a justification for re-opening the assessment, but this re-assessment is the responsibility of the Sales Tax Officer. And for this purpose, the Officer charged with the task should act in an honest and fair manner and not vindictively or capriciously. There should be some objective discussion of reasons and factors taken into account by the Officer. As we have already observed the learned Sales Tax Officer's order does not furnish to us any idea of any concrete materials which he considered or what factors he took into consideration and to us his order appears to be arbitrary and vindictive also. We are conscious of the fact that vindictive is a strong term, but the increase from the figure of Rs 24200/- to that of Rs. 100000/- (one lakh) nearly the three times of the original estimate appears prima facie to be vindictive. We regret to say that the learned Deputy Commissioner Sales Tax (Appeals) does not appear to have applied his judicial mind at all to the facts and law involved in the case and has almost repeated valuation what the learned Sales Tax Officer had said in his order. For the above reasons we hold that both the orders of officer below have resulted in great prejudice to the petitioner and both of them deserve to be set aside. The revision is therefore accepted and the case remanded back to the learned Sales Tax Officer to hold an enquiry again giving the petitioner full opportunity to meet the case against him and then proceed to make a fresh reassessment (if justified by the result of the enquiry) in accordance with the law. . ;