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. 4,000 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 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. 14,000 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., 29 S.T.C. 316. It is significant to note that there is no evidence whatsoever to connect the sum of Rs. 14,000 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 5th February 1969 that there was no direct evidence to show that the income was received from trade in foodgrains. He, however, pointed out:

(3.) IN the present case there is no evidence whatever to connect the sum of Rs. 14,000 with a business transaction that is liable to sales tax. The Sales Tax Officer and the appellate authorities were, in our view, not justified in coming to the conclusion that the Assessee had derived this amount from sale transactions which are liable to sales tax. Their conclusions are not supported by any evidence whatsoever and are therefore unsustainable in law. In the circumstances we are of the view that the addition of Rs. 93,333 to the turnover in foodgrains in the Assessee's business for the relevant assessment year is incorrect. Accordingly the order of the Tribunal under revision is set aside and the Tax Revision Case is allowed with costs. Counsel's fee Rs. 150.