PREMA JEWELLERY Vs. STATE OF KERALA

JUDGEMENT

(1.) REVISION is at the instance of the assessee which is a partnership-firm dealing in jewellery. For the assessment year 1987-88 it declared a total taxable turnover of Rs. 6,07,140. The assessing authority rejected the books of account and completed the assessment to the best of judgment on a turnover of Rs. 14,62,890. The Appellate Assistant Commissioner dismissed the appeal filed by the assessee. But before the Tribunal the assessee obtained relief to some extent, since it reduced the estimation from 4 times the running stock to 3 times the running stock. From the above order of the Tribunal the revision is filed.

(2.) THE books of account were rejected by the assessing authority, since suppression was found on inspection of the business premises by the Intelligence Officer on November 13, 1987. THEre was excess stock of 44. 950 gms. of gold ornaments and a shortage in stock of 106. 750 gms. of silver ornaments. THE difference was admitted by the assessee and the offence of non-maintenance of correct and complete account had been compounded for Rs. 1,500. It was also found that no stock register was maintained for silver ornaments. THE assessing authority proposed to fix turnover on a multiple of 4 times of the running stock. THE assessee contended in his reply that the actual stock difference in the gold ornaments was only 4. 950 gms. and it was due to a clerical mistake the difference was shown as 44. 950 gms. It was also contended that the addition is highly excessive. It was rejecting the above contention of the assessee the assessment proceeding was completed. As mentioned earlier, the first appellate authority did not accept the contentions of the assessee. THE Tribunal did not accept the explanation submitted by the assessee for the difference in the stock and it held that the excess stock found on inspection really existed and that pointed to purchase suppression. Relying on a decision of this Court in E. I. Varghese v. State of Kerala [1989] 75 STC 378, the Tribunal took the view that estimation of sales turnover of jewellery business at multiples of average running stock is a method which can be adopted. It also found that adoption of such method in the facts of the case by the assessing authority was justified. But taking into consideration the quantum of the suppression and the nature of the suppression it took the view that an addition of 3 times the average running stock in respect of gold and silver jewellary will be reasonable in this case.

(3.) TAKING into consideration all the facts and circumstances of the case we find that interest of justice will be served if two times the average running stock is taken. We therefore modify the order passed by the Tribunal estimating the turnover as three times the running stock value as two times the running stock. The revision stands partly allowed. C. M. P. No. 946 of 1996 in T. R. C. No. 30 of 1996 dismissed. Petition partly allowed. .