TMI Blog1993 (6) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny, that the vouchers for the expenditure incurred are not forthcoming, that no turnover of soda, soft drinks (cola) and arishtam were conceded and that when the business place of the dealers at Paramattom, one of the shops, was inspected by the Intelligence Wing of the department on October 21, 1986, stock variation and discrepancies were found out. The assessee compounded the offence by paying Rs. 7,000. It was noticed that the total turnover of arrack was in the sum of Rs. 39,17,799. The excess stock difference of 608 litres, found out on the surprise inspection on October 21, 1986, worked out to 17 per cent of the book stock for the day; so the Sales Tax Officer added for omission and suppression a sum of Rs. 6,66,025.83, which represented 17 per cent addition to the turnover returned. There was an addition of 2 per cent on the estimated turnover relating to soda, cola and arishtam, empty bottles for arishtam and caps coming under section 5A of the Act. The total taxable turnover was arrived at Rs. 7,65,300 and the tax liability of Rs. 3,29,168 and a surcharge of Rs. 21,945 was fixed. 3.. In appeal, the Appellate Assistant Commissioner reduced the estimate and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent basis. It has not been so done in the instant case. So, the order of the Appellate Tribunal is erroneous in law. 5.. On the other hand, counsel for the Revenue submitted that admittedly on a surprise inspection of the business premises of the assessee at Paramattom on October 21, 1986, stock variation and other discrepancies were found out. The assessee did not produce the accounts of the various shops for scrutiny. The turnover on soda, soft drinks and arishtam were not disclosed. These and other defects entailed rejection of accounts and warranted a best judgment assessment. The best judgment assessment made by the assessing authority is based on material. The material being the excess stock difference found on the inspection on October 21, 1986, which worked out to 17 per cent of the book stock per day. The assessing authority was justified in adopting the same percentage for the whole year, for the Paramattom shop and for other shops, since it was probable that the assessee would have excess stock on other days and also in other shops. The Appellate Assistant Commissioner fixed the addition on a lump sum basis at Rs. 1,50,000 arbitrarily. The Sales Tax Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of fraud and, it would have been thought advisable to maintain only one set of false accounts in the head office. Be that as it may, the maintenance of secret accounts in the branch office cannot be assumed in the circumstances of the case. That apart, the maintenance of secret accounts in the branch office might lead to an inference that the accounts disclosed did not comprehend all the transactions of the branch office. But that does not establish or even probabilise the finding that 135 per cent or 200 per cent or 500 per cent of the disclosed turnover was suppressed. That could have been ascertained from other materials. The branch office had dealings with other customers. Their names were disclosed in the accounts. The accounts of those customers or their statements could have afforded a basis for the best judgment assessment. There must also have been other surrounding circumstances, such as those mentioned in the Privy Council s decision cited supra. But in this case there was no material before the assessing authority relevant to the assessment and the impugned assessments were arbitrarily made by applying a ratio between disclosed and concealed turnover in one shop to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the above facts and circumstances of the case and the arguments advanced by the learned authorised representative I think that a lump sum addition of Rs. 1,50,000 will be more just and reasonable in this case and I order accordingly. So also the addition of Rs. 91,677 made for cola, soda, arishtam is reduced to Rs. 75,000. In considering the appeals filed by the assessee and the Revenue, the Appellate Tribunal held that in the absence of regular accounts relating to all the 12 shops coupled with the sizable quantum of suppression detected and admitted by the appellant (assessee) especially when the suppression detected related to a single day, the best judgment assessment made by the assessing authority by relying (multiplying) the percentage of suppression detected is found to be proper and legal. The Appellate Tribunal further held that in the light of the decision in Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77 (SC) the interference made by the Appellate Assistant Commissioner is unwarranted and the quantum of addition sustained by the Appellate Assistant Commissioner is not based on any material or basis. We are of the view that the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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