COMMISSIONER OF SALES TAX Vs. PRAKASH GENERAL STORES

JUDGEMENT

(1.) THIS is a reference under Section 44 of the Madhya Pradesh General "sales Tax Act, 1958. The first question has been referred at the instance of the department and is as follows :

(2.) THE assessee is a general merchant. He submitted a return showing a gross sale of Rs. 58,633 and 11 annas. The Sales Tax Officer got information that the gross sales returned by the assessee had been substantially minimised. A consignment of seven packages was, however, caught by the flying squad and on enquiry it was found that the value of those seven packages was about Rs. 25,000. The assessee was required to explain why he had shown the value of the goods contained in those packages at Rs. 1,442. 67. On taking evidence, it was found that the explanation given by the assessee alleging loss of original bijak was false. The assessee had obtained a duplicate bijak in order to conceal the real value of the goods and the explanation for obtaining a duplicate bijak was also found to be false. Upon these findings, the gross turnover of the assessee was assessed at Rs. 1,00,000 and a sum of Rs. 1,000 was imposed on him as penalty. In this connection it may also be noted that the assessee had paid a tax of Rs. 2,910. 64 with his return. According to the assessment made he was liable to pay a tax of Rs. 4,920. Thus there was avoidance of more than Rs. 2,000 to be paid as tax. The penalty was imposed under Section 43 (1) of the Act. On appeal, the assessment and the penalty were upheld. However, on second appeal the Board of Revenue was of opinion that the penalty could not be imposed, although the assessment was fully justified. The reason given by the Board was "in the instant case the assessing officer resorted to the best judgment assessment under Section 18 (4) (d) of the Act. He did not come to a definite finding about the actual amount which was concealed to be shown in the returns. What he did was to make an estimate in the absence of proper accounts. . . . He has not given facts to show what amount was deliberately concealed and was not shown in the returns. An estimate of the turnover cannot be the amount which was concealed according to Section 43 (1 ). " We are unable to agree with this line of reasoning by the Board of Revenue. Section 43 (1) which authorises the imposition of penalty does not require that the actual amount of turnover concealed on which tax should have been paid, must be found on the basis of accounts and documents produced before the assessing officer and only then a penalty can be imposed. The relevant part of Section 43 (1) is as follows :

(3.) AS regards the second question, on the data given, it is not possible to say that the assessment of the turnover at Rs. 1,00,000 was so unreasonable as to call for interference. The assessee himself had shown his turnover at more than Rs. 50,000. Only one detected item indicated that he had concealed the turnover worth about Rs. 25,000. In such a case, increasing the turnover by a total amount of Rs. 50,000 from what had been returned by the assessee cannot be said to be excessive. The second question also must, therefore, be answered in the affirmative (against the assessee ).