M O JOHN Vs. STATE OF KERALA

JUDGEMENT

(1.) The question arising for our consideration in this Tax Revision Case is:

(2.) The assessee is a dealer in foodgrains and other articles. He returned a taxable turnover of Rs. 98,638.77 for the assessment year 1967-68. The Sales Tax Officer rejected his accounts in view of an unexplained investment of Rs. 10,000/-, and a credit of Rs. 4000/- which stood in the name of his deceased mother. These sums had been treated by the Income Tax Officer as income falling under the head "other sources" in the assessment proceedings under the Central Income Tax Act for the relevant assessment year. The total sum of Rs. 14,000/- was treated by the Sales Tax Officer as profit from undisclosed transactions and the turnover of such transactions was estimated at Rs. 93,333/-. Adding this amount to the declared turnover, the officer determined the taxable turnover for the year at Rs. 1,91,972/-. The order was confirmed by the Appellate Assistant Commissioner, Trichur. On further appeal, the Kerala Sales Tax Appellate Tribunal, by a majority, held that the Sales Tax Officer was perfectly justified in treating the aforesaid amount of Rs. 14000/- as profit arising from business dealings which had not been accounted for. Accordingly the appeal was dismissed. The Tribunal in arriving at this conclusion, followed a decision of the Madhya Pradesh High Court in Girdhari Lal Nannelal v. Sales Tax Commissioner, M. P. (27 STC 316), It is significant to note that there is no evidence whatsoever to connect the sum of Rs 14000/- with any business transaction which is exigible to tax under the Kerala General Sales Tax Act, 1963. Neither the Sales Tax Officer nor the Appellate Authorities could point out any nexus between this sum and a business transaction which is liable to sales tax. The Sales Tax Officer stated in his assessment order dated 5-2-1969 that there was no direct evidence to show that the income was received from trade in foodgrains. He, however, pointed out:

(3.) The decision of the Madhya Pradesh High Court, which was followed by the Chairman of the tribunal, was considered in appeal by the Supreme Court. (See Girdhari Lal Nannelal v. Sales Tax Commissioner, M. P. -- 39 STC 31, 33). In allowing the appeal, the Supreme Court stated: