DOMA SAHU KISHUN LAL SAO Vs. STATE OF BIHAR

JUDGEMENT

(1.) THIS reference is made by the Board of Revenue under Section 25(3) of the Bihar Sales Tax Act.

(2.) THE material facts are that for the quarter ending 30th of September, 1945, the assessee was taxed under Section 10 of the Act on a total taxable turnover of Rs. 5,88,000. The assessee preferred an appeal before the Commissioner of Sales Tax who by his order dated 9th of March, 1948, upheld the assessment made by the Sales Tax Officer. The assessee then moved the Board of Revenue against the order of the Commissioner but his petition was rejected by the Board by its order dated 6th of August, 1948. In pursuance of the order of the High Court, dated 14th of January, 1949, the Board of Revenue has formulated the following questions of law for the determination of the High Court : "(1) Is the method adopted by the Sales Tax Officer legal and proper for the determination of the assessee's turnover for the quarter ending 30th September, 1945 ?" and "(2) Are there any legal materials to justify the finding that the average sale of the assessee was Rs. 8,000 per day ?"

(3.) ON behalf of the assessee reference was made to Raghunath Mahadeo v. Commissioner of Income-tax, Bihar and Orissa ([1925] A.I.R. 1925 Pat. 694.), Dunichand Dhani Ram v. Commissioner of Income-tax ([1926] I.L.R. 7 Lah. 201.), and Nirmal Kumar Singh Nowlaksha v. Secretary of State for India in Council ([1925] A. I.R. 1925 Cal. 890.). But in my opinion none of these authorities is of much assistance to the assessee. In all the three cases it was held by the High Court that Section 23(4) of the Income-tax Act was not applicable. But the material facts in each case ought to be distinguished from those of the present case. In the Patna case the assessee produced certain books of accounts to show what his actual profits were. The Income-tax Officer said that the accounts had not been balanced and therefore he could not get reliable information from them and accordingly proceeded to make assessment under Section 23(4) of the Income-tax Act. It was not found in that case that the books of accounts produced were not genuine but the Income-tax Officer did not accept the evidence produced as conclusive of the matter. In the Lahore case the assessee made a return of his income and then, in obedience to an order under Section 22(4) of the Income-tax Act, produced all his account books but the Income-tax Officer refused to accept the books and proceeded to make assessment under Section 23(4) merely because the account books were complicated and they were not maintained in a proper manner. In the Calcutta case a return was made by the assessee under Section 22(3) of the Income-tax Act. The Income-tax Officer accepted the return made by the assessee with respect to the profits of six businesses but he refused to accept the deductions which the assessee sought to make in respect of the expenses of his business. Therefore the Income-tax Officer made a percentage deduction from the profits to represent the legitimate deductions for expenditure incurred in an arbitrary manner. Upon these facts it was held that Section 23(4) did not apply. It is manifest that the material facts of the present case are widely different. Having rejected all the account books furnished by the assessee as not genuine it was certainly open to the Sales Tax Officer, indeed it was his duty, to make assessment for the period in question under Section 10(3) of the Sales Tax Act to the best of his judgment.