V. K. BALAKRISHNAN Vs. STATE

JUDGEMENT

(1.) PETITIONER , once an abkari contractor, seeks to quash Exts. P13 and P14 orders assessing contribution under the Toddy Workers Welfare Fund Act, for the period 18-4-86 to 14-10-86 and directing him to pay the same. These orders were affirmed in appeal by Ext. P 16.

(2.) PETITIONER was the highest bidder for toddy shops in the Karunagappally Range for the year 1986-87. He submits that he could run the shops only for the period 18-4-86 to 14-9-86, as he had to close the shops thereafter due to problems created, by the workman. Despite this he submits he was directed to pay contribution for the period 18-4-86 to 14-10-86. His further grievance is that the demand is not based on any material, and that assessment is arbitrary. He would also submit that the 2nd respondent did not furnish him particulars relating to the employees, attached to the shops, in spite of his requests in this behalf and that an assessment was made in respect of all the shops, while contribution had to be assessed in respect of each shop. Petitioner referred to Ext. P13 to show that the basis of assessment was statements made by one Sadanandan, Joint Secretary of C. I. T. U., Purushothaman, Joint Secretary of A. I. T. U. C and Gopinatha Kurup, Secretary of I. N. T. U. C. Ext. P13 also shows that "other reports" were taken into account. Counsel submitted that even a best judgment assessment, must rest on acceptable material, and that material upon which assessment is proposed, must be put to the assessee, before making a determination. Counsel for respondents did not dispute these propositions, but be would submit that a reasonable opportunity was afforded to petitioner and he was put on notice of the material, on which the assessment was made.

(3.) IN Welfare Fund Inspector v. Krishnan Nair and others (ILR 1976 (1) Kerala 302 D B) a case arising under the same statute, Govindan Nair, C. J. speaking for the Court observed; "There must be something more than a mere suspicion to support the assessment". The Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax, West Bengal (AIR 1955 SC 65) outlined the requirements, preceding best judgment assessments. The Court held that bare suspicion cannot support an assessment. In Varghese v. State of Kerala (1970 KLT 979 FB), this Court surveyed the law governing best judgment assessments and observed that the assessing officer may make an estimate if he rejects the return filed. But, the estimate must be based on evidence, or other acceptable material. The assessing officer must make what he honestly believes to be a fair estimate of the proper figures of assessment, and for this purpose, he may take into consideration such material as he has before him,' including the assessee's circumstances, knowledge of previous returns, and other matters which, he thinks, will assist him in arriving at a fair and proper estimate. The material on which he proposes to rely must be put to the assessee, to enable him to show cause, why such material should not be accepted. To the same effect, is a decision of this court in T. C. N. Menon v. Income tax Officer (96 ITR 148). The Court of appeal, in Board of Education v. Rice and others (1911 AC 179) indicated the basic principle, and it is that an authority must act in good faith and fairly listen to both sides, for, that is a duty lying upon everyone who decides anything. In State of Kerala v. C. Velukutty (60 STC 239) Subba Rao, J. (as His Lordship then was) observed: "Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess work in a best judgment assessment, it shall not be a wild one, but shall have a reasonable nexus to the available material and circumstances of each case ...................... it does not enable the assessing authority to function capriciously without regard for the available material." In State of Kerala v. K. T. Shaduli Yusuff (39 STC 478) the Supreme Court stressed the need to adhere to principles of natural justice, in making a best judgment assessment, as the proceedings are quasi judicial in nature. The court stated: