C P KUPPUSWAMY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE present appeal has been filed against a suo motu revision made by the board of Revenue of an assessment of sales tax for the year 1971-72. THE assessee is a dealer in cotton seeds and oilcakes. THE deputy Commercial Tax Officer who checked the accounts in order to verify the correctness of the return filed by the assessee noticed some defects and irregularities in the accounts. He considered that there was suppression of sales and he added a sum of Rs. 2, 54, 894. 50. This was on the basis that on a shandy day, namely, 6th December, 1971, there was an inspection of the assessee's premises in which there were slips, which covered a turnover of Rs. 7, 282. 70. THE view of the assessing authority was that there must have been similar suppressions on the other 35 days of shandy and that is how the figure arrived at from the slips was multiplied by 35. THE assessee appealed to the Appellate Assistant Commissioner, who after elaborately discussing the facts and the contentions of the assessee came to the conclusion that an addition of 3 per cent of turnover as per the accounts would meet the ends of justice. THE amount so added came to Rs. 33, 675. 40. THE Board of Revenue considered that the appellate authority was not justified in having granted the reduction in the turnover and therefore took up suo motu proceedings and restored the order of the assessing authority. A sum of Rs. 830 was also levied as penalty for wilful and deliberate suppression of turnover. THE assessee has filed the present appeal challenging the order of the Board of Revenue. THE learned counsel for the assessee contended that the Board of Revenue has interfered with the order of the appellate Assistant Commissioner purporting to exercise its powers of revision in an unjustified and unjustifiable manner. According to the assessee , there were inspections on 13th May, 1971, and 1st september, 1971, in which there were no suppressions as such of any sales even though there might have been some excess stock for which the explanation offered by the assessee had not been accepted. He pointed out that the inference that there must have been a large scale suppression on each of the shandy days merely because of the discovery of certain slips on 6th December, 1971, could not serve as the foundation for multiplying those slips by 35. He further pointed out that the Appellate Assistant Commissioner has found, as a fact, that a sum of Rs. 559 being a part of the amount covered by the slips recovered on 6th December, 1971, had actually been accounted for. If that sum of Rs. 559 is taken into account, then the assessee would be guilty of any suppression, if at all, only to the extent of Rs. 6, 723. 70. He contended that the Appellate Assistant Commissioner had gone into all the relevant facts in arriving at the additional turnover to be assessed. For the respondent the submission was that the Appellate Assistant Commissioner had proceeded on erroneous lines in reducing the turnover. THE point urged by the learned. Additional Government Pleader was that the Appellate Assistant commissioner had taken the trade in oilcakes to be seasonal which did not correspond to the facts. His further submission was that by the recovery of the slips on 6th December, 1971, it was established that the assessee had clandestine transactions which could not be held to be isolated so that it had to be distributed for the entire period preceding that date. His point, therefore, was that the addition of Rs. 2, 54, 894. 50 as made by the Deputy Commercial Tax Officer was rightly restored by the Board of Revenue. We are unable to agree with the submissions urged on behalf of the State. It is rather difficult to comprehend how the Board of Revenue considered that there was suppression to the extent of what had been estimated by the assessing authority himself, when it was demonstrated by the Appellate Assistant Commissioner that the assessing authority had not based his estimate on proper figures. When reference to the recovery of slips on 6th December, 1971, it is not in dispute that the total turnover involved is Rs. 7, 282. 70. THE Appellate Assistant commissioner has found that a sum of Rs. 559 has been accounted for. THEre is no whisper in the order of the Board of Revenue to show that this finding of the Appellate Assistant Commissioner was in any manner wrong. Thus, the Board of Revenue, if it were to exercise its powers of revision in a case like this, could not have proceeded on the basis of the deputy Commercial Tax Officer's estimate. This estimate could only be, even on the Board of Revenue's own reasoning, 35 times the sum of Rs. 6, 723. 70. As rightly contended by the assessee , there were inspections on 13th May, 1971, and 1st September, 1971. THEre was no discovery of any suppressed turnover on those dates. Thus, in the absence of any discovery of suppressed transactions on those earlier occasions, there was no justification for the Board of Revenue to proceed on the basis that there were similar suppressions even prior to 6th December, 1971. It hardly need emphasis that the Board of Revenue in arriving at the turnover is not to act mechanically but to act in a judicial manner while exercising, as it does, its powers of revision, which is a judicial power.

(2.) AS for the criticism that the Appellate ASsistant commissioner had wrongly proceeded on the basis that the sales of oilcakes were only seasonal, we find that this criticism is not borne out by the record at all. In the order of the Appellate ASsistant Commissioner, there is an analysis of the turnover during two periods. The turnover between 1st April, 1971, and 18th June, 1971, comes to Rs. 12, 081. 83. The turnover between 19th June, 1971, and 31st March, 1972, comes to Rs. 1, 04, 850. 78. Thus, it is clear that the sales in the second period are much more than the sales in the first period. This could only be because of the sales being seasonal. The turnover in the first period works out at the rate of less than Rs. 4, 000 per month while the turnover in the second period works out at the rate of about Rs. 15, 000 per month. The seasonal character of the trade, whatever may be the experience of the authorities in any other case, is clearly established in the present case. Further, the authorities are not supposed to import any a priori conceptions of their own in exercising the judicial power of revision. It is an elementary requirement that they must have appropriate data to support any estimate that they made. Having regard to the above features, we consider that the Board of Revenue had absolutely no material to come to the conclusion that the suppressed turnover could be to the tune of Rs. 2, 54, 894. 50. In exercising the powers of revision, the board is expected to concentrate its attention on the order which it seeks to revise. The order that is sought to be revised in the present case was that of the Appellate ASsistant Commissioner. If there was any wrong reasoning in the said order, it is , of course, open to the Board of revenue to rectify the error in reasoning by taking appropriate action. But in the present cas the order of the Board of Revenue says very little about any wrong reasoning in the order of the Appellate ASsistant Commissioner except to mention that the Appellate assistant Commissioner had proceeded erroneously on the basis that the turnover in oilcakes was only a seasonal one. We have shown earlier that on the present facts the Appellate ASsistant Commissioner's conclusion regarding the nature of the activity of the assessee being seasonal cannot be found fault with. We have also shown that the estimate made by the Deputy commercial Tax Officer could not have been proper in view of the fact that a part of the turnover which was taken as suppressed has been accounted for.