BHAG CHAND KHEM CHAND Vs. SALES TAX DEPARTMENT

JUDGEMENT

(1.) THIS is a revision application preferred by the dealer against the order dated 9. 6. 60 of the Deputy Commissioner (Appeals) Excise and Taxation, Udaipur. It arises under the following circumstances. The applicant having not furnished returns for the period 3. 11. 56 to 22. 10. 57, the assessing authority, Sales Tax Officer, Udaipur city, vide his order dated 9. 6. 59 took action under the "best judgment" provision of the Rajasthan Sales Tax Act, 1954. He fixed "taxable turnover" of the applicant at Rs. 20,000/- and assessed him to tax accordingly. Besides a penalty of Rs. 50/- was also imposed upon him. In appeal the learned Deputy Commissioner reduced the amount of "taxable turnover" to Rs. 15,000/- and ordered assessment to be made accordingly, upholding the penalty imposed.

(2.) WE have heard the learned counsel for the parties and examined the record also. The only point urged on behalf of the applicant before us is that even under the "best judgment" provision of assessment, the assessing authority should have acted judicially and not arbitrarily. The argument is that no reasons whatsoever have been stated in the order of the learned authorities below. This contention is bound to succeed. For we find that neither of the two authorities below have given any reasons for fixing the figure of taxable turnover to the amount they have done. The learned Dy. Commissioner has himself objected to the manner of fixation of the amount by the learned Sales Tax Officer, when he has observed "the assessing authority has given no reasons for such considerably higher estimation as compared to previous years. " But then he too has perhaps involuntarily fallen into the same error, by proceeding immediately thereafter to say, without stating any reasons whatsoever, that "the amount of taxable turnover is reduced to Rs. 15,000/ -. " Sec. 10 (1) (b) of the Act which empowers the assessing authority to assess a dealer "to the best of his judgment" requires him to do so ''after making such enquiry as he considers necessary". The other provisions of sec. 10 (3) of the Act empowering him to do so also ask him to determine the tax if the returns furnished do not comply with all the terms of the notice issued or the method of accounting has not been employed regularly or the method employed is such that in the opinion of the authority assessment cannot properly be made on the basis thereof. Both these provisions thus envisage a basis for such a "best judgment" assessment. In other words, the assessing authority is required to act in a quasi-judicial manner for the purpose and it cannot fix any figure without any basis whatsoever in an arbitrary manner. There may come in a little amount of arbitrariness in such a case; but still it should be based on certain facts, howsoever derived from a guess-work but in an honest manner. As authority for the purpose would be found in 1961 Sales Tax esses 272, Balkrishan and sons vs. Sales Tax Officer and another decided by the High Court of Kerala on Oct. 25, 1960. The observations made there are: - "but it is clear that the taxing authorities when making assessment discharge quasi-judicial function, and the order must not be capricious arbitrary or punitive. The order by the taxing authority must also disclose the basis for the best judgment assessment so that the the higher authorities may know the grounds on which the assessment has been based. As regards the first duty we may quote the following passage in Commissioner of Income Tax Vs. Laxmainarain Badridas (1937) 5 I. T. R. 170 - The officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information. He may not act dishonestly or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose, he must, their Lordships think, be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate and though there must necessarily be guess-work in the matter, it must be honest guess-work. In that sense too, the assessment must be to some extent arbitrary".