SATYA CONFECTIONARY WORKS Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) These are two connected revisions under section 11 (6-A) directed against the order of the Additional Judge (Revisions), Sales Tax, by which he upheld the rejection of account books, enhancement of turnover and imposition of penalty under section 15-A (1) (c ). Revision No. 935 of 1978 is directed against imposing penalty and Revision No. 936 of 1978 is against the assessment order. The assessee carried on the business of manufacturing and selling confectionery and purchase and sale of liquid glucose. For the year 1972-73 it disclosed a net turnover of Rs. 6,23,679. 30 which was enhanced by the Sales Tax Officer to Rs. 8,00,000. It was reduced in appeal to Rs. 7,10,000. The assessing authority imposed penalty also on the finding that the assessee had concealed its turnover against which the assessee filed appeal which was dismissed although the amount of penalty was reduced. The assessee and the Commissioner both filed revisions. The Additional Judge (Revisions) dismissed the revision of the assessee in respect of penalty and allowed the revision of the department and restored the order of the Sales Tax Officer fixing turnover at Rs. 8,00,000. The assessee's account books were rejected mainly because of a survey dated 4th September, 1972. At the time of survey certain loose papers were found which proved that the assessee was making unaccounted sale. The rejection of account books being based on material found at the time of survey established that the account books were not maintained properly. The order cannot be said to suffer from any error. As regards the determination of the turnover at Rs. 8,00,000, the Sales Tax Officer found that the disclosed purchase of raw material for the assessment year in dispute was Rs. 6,37,021. 97 and therefore the total sale ought to be estimated at Rs. 8,00,000. The appellate authority reduced the turnover. The Judge (Revisions) did not agree with it. He instead of relying on inferences, relied on material and as such the order cannot be said to be vitiated. The rejection of account books and the fixation of turnover therefore did not call for any interference and the revision of the assessee directly against this order fails. Coming to the question of imposition of penalty it has been done because the assessee concealed the turnover and deliberately furnished inaccurate particulars of turnover. The penalty proceedings under section 15-A are penal in nature. The burden to establish the ingredients for imposing penalty is on the department. From the order of the revising authority it is apparent that apart from the finding recorded in the assessment proceedings there was no material which could give rise to an inference that the assessee concealed its turnover. In survey certain loose sheets regarding sales were found and the explanation of the assessee in that regard was rejected. The falsity of the assessee's explanation in the assessment proceedings does not give rise to a presumption that the turnover was concealed. If on material found at the time of survey the assessee files its return it is obviously admitting that the account books were not properly maintained. This is not the requirement of law. It is open to the assessee to explain. It is for the assessing authority to accept the explanation or reject it but the rejection of explanation for its falsity does not furnish conclusive evidence that the turnover was concealed. It would not be out of place to mention that a similar provision existed under section 28 (1) of the Income-tax Act. In Commissioner of Income-tax, West Bengal v. Anwar Ali [1970] 76 ITR 696 (SC) this provision came up for interpretation before the Supreme Court. At the time of assessment it was found that cash deposit of Rs. 87,000 has been made by the assessee on 21st November, 1946, in the bank. The assessee explained that the amount was received from a relation who got panicky during the communal riots in Bihar and he deposited it in fixed deposit account of the assessee. The explanation was found to be false and it was included in the assessee's income. In penalty proceedings for concealing income deliberately and furnishing inaccurate particulars it was held by the Supreme Court : " The gist of the offence under section 28 (1) (c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income. " In Ram Dayal Chhotey Lal v. Sales Tax Officer Shahjahanpur [1974] 34 STC 225; 1974 UPTC 319 it was held by this Court that : " Merely because the assessee's books of account had not been accepted and a best judgment assessment was made at a figure higher than that indicated in the assessee's turnover it does not mean that the turnover disclosed by the assessee was necessarily wrong. Burden of showing that the turnover declared by the assessee was necessarily wrong is on the department. " In the view of these decisions, there can be no doubt that the imposition of penalty merely on the finding recorded in the assessment proceedings cannot be sustained. In fact there was no material from which it could be inferred that the assessee had concealed its turnover or deliberately furnished inaccurate particulars. In the result, Revision No. 935 of 1978 succeeds and is allowed whereas Revision No. 936 of 1978 is dismissed. A copy of the order shall be sent to the Additional Judge (Revisions) to take proceedings under section 11 (8) of the Sales Tax Act. The parties shall bear their own costs. .