MOHANLAL VISHRAM Vs. COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THIS is a reference Under Section 44 (1) of the Madhya Pradesh Sales Tax Act, 1958, made at the instance of the assessee. The questions which have been referred to us for our opinion are as follows :

(2.) THE facts material for this reference, as set out in the statement of the case, are these. The applicant is a forest contractor and deals in firewood and timber at Chhindwara. The period of assessment is 15th November, 1955, to 2nd November, 1956. During that period, the applicant had taken forest contracts for Rs. 1,00,600. In his return, he showed a total turnover of Rs. 85,269-5-9. Although the turnover was supported by entries made in the applicant's books of account maintained in the regular course of business, the Sales Tax Officer, Chhindwara, did not accept the account books as correct on the ground that the return was low. By an order dated 1st October, 1957, he made a best Judgment assessment on the basis of an estimate of gross return at 2 times the price of the forest produce paid by the applicant. In the appeal filed by the applicant, the Appellate Assistant Commissioner also did not accept the book-sales as entered in the regularly maintained account books of the applicant as the real sales of the applicant. By his order dated 24th August, 1959, the Appellate Assistant Commissioner assessed the gross turnover at an arbitrary figure of Rs. 1,50,000. The applicant then appealed to the Board of Revenue (Tribunal) which took the view that the estimate of the gross turnover made by the Appellate Assistant Commissioner could not be accepted because it was completely arbitrary and without any reasonable basis. Accordingly, by its order dated 6th May, 1961, the Tribunal remanded the case to the Sales Tax Officer for a fresh assessment according to law. It may be mentioned here that even the Tribunal stated that the turnover given by the applicant was too suspicious to be accepted even though it was supported by regularly maintained books of account.

(3.) IT is urged before us that since the Sales Tax Authorities and the Tribunal found that the applicant's account books were regularly maintained and did not also disclose any flaw which could discredit the entries made in those books, they were bound to accept the book-sales and to proceed to tax the sales on that basis. In support of his view, he relied upon two cases: S. Veeriah Reddiar v. Commissioner of Income-tax, Travancore-Cochin [1960] 38 I. T. R. 152 and R. M. P. Perianna Pillai and Co. v. Commissioner of Income-tax [1961] 42 I. T. R. 370. We consider it sufficient to say that these cases considered the meaning and scope of the proviso to Section 13 of the Indian Income-tax Act, 1922. It is well-settled that even apart from that proviso, the Income-tax Officer may, for good and sufficient reasons, reject the account books as unreliable and make an assessment Under Section 23 (3) of that Act: Gunda Subbayya v. Commissioner of Income-tax, Madras [1939] 7 I. T. R. 21 F. B. . So far as this case is concerned, we consider it sufficient to say that there was no burden on the assessing authorities to prove by positive evidence that the account books were unreliable and further that the conclusion that the account books are unreliable is a conclusion of fact: Ganga Ram Balmokand v. Commissioner of Income-Tax, Punjab [1937] 5 I. T. R. 464. In view of this position, our answer to the first question is that even if the account books are regularly maintained and no flaw can be discovered in those books, the assessing authorities are not bound to accept them if they be found to be otherwise unreliable.