NEW STREET OIL MILLS Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE four tax revision cases under S. 41 of the General Sales Tax Act, 1963, are by the same assessee against assessments to sales tax for the years 1966 67, 1967 68, 1969 70 and 1968 69, respectively. The assessments were on best of judgment under S. 17 of the Act after issuing the requisite pre assessment notices on the ground that the assessee did not produce accounts despite several notices to do so. The documents and records stated to have been seized on search of the assessee's premises were relied on ; and, in the light of these records, the taxable turnovers reported by the assessee for the years in question were enhanced and revised as follows : Counsel for the petitioner stressed this phenomenal increase from the reported turnover to the revised or enhanced figure as itself sufficiently demonstrative of the taxing authorities having given free rein to their fertile imagination and abandoned the process of judicial determination and assessment.

(2.) THE history of the assessments in question opens with a chapter of somewhat prolonged and protracted correspondence between the assessee's advocate and the taxing authorities, in the course of which we regret to observe they strayed into avoidable limits in the use of language, unbecoming of both. To trace these rather briefly, the position disclosed is this : By notice dated 5th September, 1968, the assessee was called upon to appear on 10th September, 1968, with its accounts for all the four years. According to the petitioner, he produced the accounts on 10th September, 1968. On 16th September, 1968, the Intelligence Officer wrote to the assessee drawing attention to the office summons dated 5th September, 1968, and complaining that the assessee had neither appeared on 10th September, 1968, nor produced the accounts called for, nor filed any petition for adjournment. A final opportunity to appear and produce the accounts was given by adjourning the proceedings to 10 a.m. on 24th September, 1968. The assessee replied on 20th September, 1968, stating that the accounts had been produced on 10th September, 1968. The Intelligence Officer replied by 4th October, 1968, by which the assessee was informed that on 27th August, 1968, he had inspected the assessee's premises along with the squad of officers and seized certain secret account books which were not shown to the Department. The assessee's statement that its partner, Sri A. Narayanan Nambiar had appeared on 10th September, 1968, with its accounts was denied as also the alleged production of accounts. A further opportunity to produce documents on 11th October, 1968, was granted. On 11th October, 1968, the lawyer replied. Confining only to the relevant facts, the search and inspection stated to have taken place on 27th August, 1968, were denied. The charge of non production of accounts was also denied. We skip a good part of the correspondence showing the battle of wits between the assessee's counsel and the Intelligence Officer. In answer to the assessee's letter dated 2nd June, 1969 (not in the paper book), the officer, in a letter dated 16th June, 1969, addressed to the assessee's advocate, offered inspection of the secret accounts and other documents seized on search. Rather than take advantage of the offer, the assessee's counsel by his reply dated 18th June, 1969, cavilled at the officer for "mistaking me for my client" (to quote his language), and along with denying the search and seizure denied also any desire on the part of the assessee to peruse the documents. It was stated that the question of perusing the seized documents did not arise. The officer proceeded to assess in the fashion indicated. Assessment year Reported taxable turnover Enhanced or revised turnover 1 2 3 . Rs. Rs. 1966 67 1,21,030.25 11,92,592.54 1967 68 2,16,299.55 10,99,199.06 1969 70 2,94,433.99 11,99,024.00 1968 69 99,507.10 11,55,120.00

(3.) IT was complained that the search and seizure were illegal and that, therefore, the records obtained by such search and seizure should not be utilised against the assessee. The learned Government Pleader strongly contested that the legality of the search had not been specifically urged before any of the authorities, viz., the Sales Tax Officer, the AAC, and the Tribunal, and that, therefore, the point should not be allowed to be urged in revisional proceedings. The orders of the authorities concerned do not disclose the point as to the legality of the search and seizure having been urged in any specific or pointed form. But, at the same time, the counsel for the petitioner drew our attention to ground No. 10 of the grounds of appeal to the AAC and to the Tribunal where the legality of the search was specifically put in issue. It might not be altogether fair to preclude the petitioner from urging this point. It seems really to be immaterial and irrelevant also. As the learned Government Pleader rightly pointed out, it has been ruled by a Division Bench of this Court in Varghese Varghese vs. Commr. of Agrl. IT (1976) 105 ITR 732 (Ker), that even if the search and seizure be illegal, the materials seized can still be utilised and looked into for purpose of assessment.