K P G MENON Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE tax revision cases arise out of assessments to sales tax under the Kerala General Sales Tax Act (hereinafter called the Act) made against the same assessee, who is the revision petitioner before us for the years 1970-71 to 1974-75. The assessee is a dealer in hardware, cement, paints, asbestos cement sheets, sanitary closets, etc. , carrying on business at Ottapalam. Simultaneous assessments to sales tax under the Act were made against the assessee for the five years aforementioned by 5 separate orders passed by the assessing authority on 13th November, 1976. Those were best judgment assessments made by the office under section 19 of the Act. The assessing authority found that the figures of turnover disclosed by the books of account of the assessee with regard to cement, paints, A. C. sheets and sanitary-ware were true and correct, but that the accounts did not reflect the true state of affairs in relation to the transaction in "hardware" items. Even in regard to those items the assessing authority had however found that the disparity discovered in the accounts was not due to any deliberate attempt on the part of the assessee to suppress the true state of affairs, but it had been caused on account of a fraud played on the assessee by a former employer (accountant) by name Rajan. It would appear that an inspection of the assessee's shop was conducted on 31st July, 1976, and the stock position disclosed by the books as on that date had been entered in the inspection note. In view of the fact that the figures relating to the transactions in hardware contained in the books of account of the assessee were found to be unreliable, the assessing authority proceeded to determine the turnover for all the five years by estimating it at 4 times the running stock available in the shop as on 31st July, 1976, and finalised the assessments for the 5 years on the said basis. On appeal filed by the assessee before the Appellate Assistant Commissioner of Agricultural Income-tax and Sales Tax, Palghat, the Appellate Assistant Commissioner took due note of the fact that the assessing authority itself had been satisfied that the defects noticed in the accounts of the assessee in respect of the hardware items had been occasioned by the malpractice of the accountant and that the assessee had no intention to suppress the purchases or sales in respect of the hardware items. The appellate authority also referred to the circumstance that for the two prior assessment years, namely, 1968-69 and 1969-70, the accounts of the assessee had been fully accepted in all respects by the assessing authority. After noticing these facts the appellate authority proceeded to hold that the method adopted by the Sales Tax Office for making the best judgment assessment was reasonable "as there is no other go except to take the stock actually found on 31st July, 1976, as the running stock". The appellate authority added that "there are no convincing reasons to add four times of the running stock as no other irregularities or suppressions either in hardware or other commodities like cement, A. C. sheets, etc. , are found out". On this reasoning the appellate authority held that it was reasonable to add two times the running stock of hardware and accordingly it refixed the turnover of hardware at Rs. 85,760 for each of the years 1970-71 to 1974-75 and modified the assessments accordingly.

(2.) THOUGH a second appeal was filed by the assessee before the Tribunal contending that the assessment made aforementioned was grossly arbitrary and unfair, the Tribunal rejected the said contention rather summarily by observing as follows : "we do not find any ground to interfere with this finding of the learned Appellate Assistant Commissioner and reduce further the turnover of hardware as fixed by the learned Appellate Assistant Commissioner in the first appeals, as the estimates of the turnover of hardware items at 2 times the average running stock is really nominal. "