K T ANTONY Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE tax revision cases relate to the sales tax assessments of the revision-petitioner for the two years 1967-68 and 1969-70. The Sales Tax Appellate Tribunal dealt with the appeals relating to the assessments for the two years by a common order. We heard the case together and since the question arising for decision is the same in both the cases, we too propose to dispose arising of the revision cases by a common judgment.

(2.) THE question raised has been the subject-matter of several decisions and relates to the circumstances under which and the manner in which an estimate of turnover should be made in the case of assessment to sales tax. THE principles to be applied in such cases, it is not disputed, should be the same as that applied in assessing a person to income-tax or agricultural income-tax when estimate of the income had to be made and on this question of estimate of income-tax the Judicial Committee had pronounced in Commissioner of Income-tax, Central and United Provinces v. Laxminarain Badridas [[1937] 5 I. T. R. 170 (P. C.)]. If we may say so with great respect, there is a classical statement in the judgment which has not been improved upon till now by the numerous pronouncements on the subject. We said so in a recent Full Bench decision [[1971] 27 S. T. C. 459] of this Court after referring to the above decision as well as to the Full Bench decision of the Lahore High Court in Seth Gurmukh Singh v. Commissioner of Income-tax, Punjab [[1944] 12 I. T. R. 393]. It is unnecessary to refer to all these decisions in detail again because it is only a few years back we dealt with these matters rather elaborately in the Full Bench decision of this Court in P. P. Varghese v. State of Kerala [[1971] 27 S. T. C. 459]. We shall reiterate what can be done where an estimate has to be made. One has to remember in this connection that an estimate becomes necessary, even inevitable, as a result of the assessing authorities' difficulty in finding out the income or the turnover of the person to be assessed arising from no fault of the assessing authority. Any person who insists that an accurate and precise assessment ought to be made when the exact income or turnover is to be found out should keep correct and reliable accounts. Maintenance of such accounts is the basis on which he can rely and build up not only elaborate but sound arguments that the assessing authority should not deviate from the results reflected from such accounts, unless there are compelling reasons to establish that those accounts are unreliable, untrustworthy and not good enough for the purpose of determining the income or the turnover. When once the assessee has failed to furnish proof of his income or turnover in such a manner, the matter is, in a sense, at large, and a greater freedom is given to the assessing authority. THE restraints on what he does, which has been repeatedly called an honest guess, are only that he should not act in an arbitrary, capricious or whimsical manner and further that there must be some relevant material forming the basis of his guess. Circumstances and material on which he can act may appear to be flimsy. THE mere fact that the estimate is on the basis of a guess will not make the estimate liable to be set aside by a court as long as there is a nexus between the estimate made and the materials that were available before the assessing authority. It is unnecessary to refer to the numerous decisions on the subject. But we may extract a passage from the decision of the Supreme Court in Commissioner of Sales Tax, Madhya Pradesh v. H. M. Esufali H. M. Abdulali [[1973] 32 S. T. C. 77 at 82 (S. C.)]. THE Supreme Court observed : " So long as the estimate made by him is not arbitrary and has nexus with facts discovered, the same cannot be questioned. In the very nature of things the estimate made may be an over-estimate or an under-estimate. But that is no ground for interfering with his 'best judgment'. "

(3.) AFTER all one has to remember as the Supreme Court observed in Commissioner of Sales Tax, Madhya Pradesh v. H. M. Esufali H. M. Abdulali [[1973] 32 S. T. C. 77 (S. C.)] : " The assessee cannot be permitted to take advantage of his own illegal acts. It was his duty to place all facts truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove conclusively what turnover he had suppressed. That fact must be within his personal knowledge. Hence the burden of proving that fact is on him. " This important factor must always be borne in mind in interfering with the estimate made by the assessing authority.