LAWS(P&H)-1984-3-43

PUNJAB GUN HOUSE Vs. STATE OF PUNJAB

Decided On March 20, 1984
PUNJAB GUN HOUSE Appellant
V/S
STATE OF PUNJAB Respondents

JUDGEMENT

(1.) THE Sales Tax Tribunal, Punjab has referred to us the following question of law for our opinion :

(2.) THE facts as found by the Sales Tax Tribunal are thus : The assessee is a registered dealer dealing in arms and ammunitions. It filed its return for the assessment year 1971-72 indicating gross turnover of Rs. 2,08,076. 02. It claimed certain deductions and paid the tax voluntarily. The business premises of the assessee were surprisely inspected on 19th January, 1972 by the Excise and Taxation Officer (Enforcement) and it was found that the dealer had not made any entry in the cash book after 16th September, 1971 and cash balances had also not been struck after 19th July, 1971. The said officer impounded bill books, one diary and one exercise book. On examination of the books, it was revealed that sales transactions amounting to Rs. 6,200 were entered therein but no sale bill was issued. There were other discrepancies as well with which we are presently not concerned. The dealer was confronted with the aforesaid discrepancy but it rendered the explanation that the entry of Rs. 6,200 did not relate to its sales but represented the sales made by its customers between themselves with its aid. The explanation offered by the assessee was considered as unsatisfactory and it was rejected by the Assessing Authority. Keeping in view the existence of the discrepancies detected from the books, the Assessing Authority on 22nd May, 1972 made an addition of Rs. 20,000 in the gross turnover and also imposed penalties of Rs. 50 under Section 10 (6) and Rs. 1,500 under Section 10 (7) of the Punjab General Sales Tax Act, 1948. The assessee's appeal to the Deputy Excise and Taxation Commissioner on that score was an exercise in futility. So was his effort in second appeal before the Sales Tax Tribunal. The Tribunal in that regard observed as follows :

(3.) THE learned counsel for the assessee urged that in making the "best judgment" assessment, the Assessing Authority had arbitrarily made an addition of Rs. 20,000 to the gross turnover when the alleged concealed sales were determinably up to Rs. 6,200. He maintained that at best, addition should have been made to the tune of Rs. 6 200 and possibly around that figure and not in any case to the tune of Rs. 20,000. Reliance was placed by him on Tara Chand Hari Ram v. Sales Tax Tribunal, Haryana [1972] 30 STC 342. It was held therein by this Court that a best judgment assessment cannot be arbitrary and whatever be the extent of speculative element in a best judgment assessment, it has at the same time to be based on some reasonable objective data, and further it cannot be based on suspicions without there being any material on which the Assessing Authority could rely. Reliance was also placed on Delhi Iron Syndicate v. Commissioner of Sales Tax, U. P. [1979] 44 STC 228, in which an Honourable single Judge of the Allahabad High Court has ruled that a best judgment assessment connotes exercise of care and caution and a decision which would be reasonable in the circumstances of the case and not an arbitrary or capricious assessment based on no relevant material.