MITTAL AND COMPANY Vs. STATE OF BIHAR

JUDGEMENT

(1.) This reference has been made under Section 33(1) of the Bihar Sales Tax Act, 1959, by the Commercial Taxes Tribunal, Bihar, Patna, at the instance of a dealer named Messrs Mittal and Company at Patna. The two questions of law arising out of an order passed by the Tribunal on the 18th December, 1965, in Revision Case No. T/50 of 1965, in the matter of an assessment of sales tax for the period 1962-63, have been framed as follows :-

(2.) During the relevant period, Messrs Mittal and Co. was a dealer in glass bangles. By an assessment order dated the 4th July, 1963, the dealer was assessed to sales tax for the assessment year 1962-63, by which the dealer's general turnover was increased by the assessing authority by a sum of Rs. 29,455. The dealer had, in due course, appealed against this order and it appears that during the pendency of the appeal, there was a surprise inspection of the business premises of the dealer on the 30th September, 1963. Five books of account were seized for the purpose of detailed verification and on verification, the assessing authority came to the conclusion that two of these books contained clandestine transactions, resulting in tax evasion for the same assessment year and as assessment had already been completed, the assessing authority came to the conclusion that reasonable grounds existed for believing that the turnover for the assessment year 1962-63 had escaped assessment. A proceeding under Section 18(1) was commenced and the dealer was noticed. An objection was raised by the dealer on the ground that the notice issued under Section 18(1) was illegal and that the seized books did not contain any material in respect of the period 1962-63. The objection was overruled by the assessing authority by an order passed on the 29th November, 1963. The dealer was ordered to produce its complete account books for the year 1962-63 for examination. Being dissatisfied with this order the dealer went up in revision and the revision was dismissed on the 16th January, 1964, by the Appellate Assistant Commissioner. Thereafter, on the 30th May, 1964, the appeal from the original assessment order was disposed of by the Deputy Commissioner of Commercial Taxes. The relevant portion of this order runs as follows :- I have perused the order passed by the Sales Tax Officer. The order recorded by the Sales Tax Officer does not show that there was any specific evidence of suppression of the turnover. The Sales Tax Officer has pointed out some delay in the posting of some entries but this delay cannot be taken to be any good piece of indication of any suppression of turnover. The Sales Tax Officer also seems to have suspected that the assessee might have maintained some fabricated or cooked up cash memos. But this suspicion does not seem to be well supported by any satisfactory evidence. In the circumstances I direct that the assessee's book figures should be accepted for the purpose of assessment. The order of assessment should be modified accordingly. In due course, a fresh assessment order was passed by the assessing authority. The assessing authority enhanced the gross turnover as revealed by the books of account by 150 per cent. After making certain deductions the total tax payable and the penalty were calculated. The dealer appealed against this assessment order and the appellate authority dismissed the appeal, with slight modifications. The book figures were enhanced by 100 per cent. instead of 150 per cent., as was done by the assessing authority. Thereafter the dealer went up to the Tribunal in revision and by order dated the 18th December, 1965, the revision was allowed in part.

(3.) The points which have arisen at this stage were agitated before the Tribunal thus : It was contended that after the order of remand made by the Deputy Commissioner on the 30th May, 1964, the assessing authority was bound to pass assessment order on the turnover found in the books of account and it was not justified in reopening the matter and proceeding to assess on a higher turnover. The Tribunal held that the assessing authority was justified, in the circumstances of the case, in taking action under Section 18(1) of the Bihar Sales Tax Act, 1959. It was held that the earlier appellate order of the year 1964 was no bar to the assessing authority to reopen the assessment, when it was satisfied that reasonable grounds existed for believing that the turnover of a registered dealer in respect of any period had, for any reason, escaped assessment. The second contention raised was that the assessing authority and the appellate authority had acted illegally in overlooking that Section 18(1) of the Act contemplated assessment in respect of the actual amount discovered as suppressed or having escaped assessment. It was urged that the provision of Section 18 of the Act did not clothe the assessing authority with jurisdiction to make best of judgment assessment. The Tribunal rejected this contention holding that when a proceeding was initiated under Section 18(1) of the Act, Section 16(2)(b) read with Sub-section (3) of that Section provided a machinery for completing the assessment after issue of, notice under Section 16(2)(a) of the Act. In these circumstances, the two questions, quoted above, have been referred to this court.