BSANJEEVA RAO Vs. COMMISSIONER OF COMMERCIAL TAXES IN MYSORE BANGALORE

JUDGEMENT

(1.) These are three appeals filed by an assessee challenging the legality and the propriety of the assessment made by the Commissioner of Commercial Taxes in revision enhancing the assessment for the different periods on the ground that the Commercial Tax Officer and the Deputy Commissioner in appeal had omitted to take into account in estimating the gross turnover the expenditure incurred by the assessee over the maintenance of 22 servants amounting to Rs. 7,930 per year. The assessee is the proprietor of a hotel by name "Ratan Cafe" located at Malleswaram, Bangalore 3. The Commercial Tax Officer determined the total annual sales of the assessee at Rs. 1,00,000 for the year 1956-57 and for the first and second half-years of 1957-58 at Rs. 50,000 each. This was a best judgment assessment as the accounts produced by the assessee did not record monthly sales of meal tickets and did not disclose the correct turnover. Being aggrieved by these decisions of the Commercial Tax Officer, the assessee preferred three appeals to the Deputy Commissioner of Commercial Taxes. That officer also held that the accounts were not verifiable and that the assessing officer was justified in estimating the turnover to the best of his judgment for all the periods under appeal. He, however, thought the assessment to be excessive as, in his view, the first year 1956-57 was the commencement of the new business and accordingly reduced the taxable turnover from Rs. 1,00,000 to Rs. 80,000. He took the same view even for the two half-years of 1957-58 and effected reduction accordingly by his consolidated order dated 13th April, 1959. Thereafter, the office of the Commercial Tax Officer, IV Additional Circle, Bangalore, was inspected by the Inspecting Officer in April, 1960 and he scrutinized the records of Messrs Ratan Cafe, Malleswaram, during the course of the inspection. As a result of this inspection, he reported to the Commissioner of Commercial Taxes on 18th April, 1960, that the expenditure over food supplied to the employees of the assessee had not been taken into account at the time of the assessment for the years 1956-57 and the two half-years of 1957-58 and that the same had escaped assessment to tax. On receipt of this resort, the Commissioner of Commercial Taxes suo motu called for the records relating to the assessment of Ratan Cafe and issued as notice dated 10th May, 1960, calling upon the assessee to show cause why the taxable turnover for the year in question should not be fixed at Rs. 1,05,595 and the order of the Deputy Commissioner of Commercial Taxes fixing the same at Rs. 80,000 should not be revised on the basis of the reasons given in the notice. The notice further called upon the assessee to show cause why for the same reasons the total turnover for each half-year of 1957-58 should not be fixed at Rs. 52,797 by including in the total establishment expenses the feeding charges of 22 savants. The notice mentioned that the feeding charges were assessed at Rs. 30 per servant per month. A second notice of the same date gave all the details and called upon the assessee to appear before the Commissioner on 1st June, 1960 at 2.30 P.M.

(2.) In response to these notices, the assessee appeared through his auditor, Sri Subramanyam, who admitted that the Commissioner had omitted the expenses on account of the 22 servants in estimating the total gross turnover, but submitted that as he had already fixed a high turnover of Rs. 80,000 for each of the years in question, there was no justification for enhancing the turnover. On the basis of the admission that the charges on account of the 22 servants had not been taken into consideration in calculating the total turnover, the learned Commissioner of Commercial Taxes came to the conclusion that it was a clear case of omission and accordingly enhanced the taxable turnover of the assessee to Rs. 1,05,595 for the year 1956-57 and to Rs. 52,797 for the first and the second half-years for the year 1957-58 and directed the tax to be levied accordingly.

(3.) It is against this order that the assessee has preferred the three appeals. The learned Advocate appearing on has behalf has contended that it was not open to the Commissioner to interfere with the assessment on the ground of factual omission in estimating the total turnover, unless there was any illegality committed by the subordinate authorities or an irregularity in the procedure adopted by them.