TMI Blog1952 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... 350 X 500) i.e., Rs. 1,75,000/2 or Rs. 87,500 and for lac at 2/3rd of the figures assessed at by the assess- ing officer, i.e., at Rs. 3,00,000. He also allowed deductions under Section 5(2)(a)(i)-Rs. 31,034-but remanded the case so far as deduc- tions claimed under Section 5(2)(a)(ii) and (v) are concerned for further examination. The assessee then moved the Board of Revenue on 28th Novem- ber, 1946, in revision petition (Exhibit D). Mr. E.C. Lee, as Member, Board of Revenue, by his order dated 1st March, 1947, (Exhibit E) requested the Commissioner of Sales Tax to pass plain orders under Section 20(2) as it was not specified in his order as to what the assessing officer was to do after completing his examination or investi- gation. Mr. M.M. Philip, as the then Commissioner of the Chota- nagpur Division reported in his letter No. 2197 J. dated 9th May, 1947, (Exhibit EE) that the direction given by the Commissioner Mr. J.W. Houlton was to examine any other evidence as found sub- sequently, and to give deductions to that extent otherwise the assess- ment would remain intact. This interpretation was accepted as correct by the then Member, Mr. Houlton. This view of Mr. Houlton was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) Whether in the circumstances of the case the assessee's figure for sale of other classes of goods like silver, gold, oilseeds, mahua etc., should not have been disregarded and substituted by an arbitrary figure of Rs. 5,00,000? Whether there is any material to assess the sale of other classes of goods like silver, gold, oilseeds, mahua etc. at Rs. 5,00,000? (6) Whether in law the result of observations said to have been made in local inspection held subsequent to the assessment period and that also of one or two of the several branches of the assessee's firm should not have been taken to form the basis of the assess- ment order? (7) Whether in the circumstances of the case, the deductions claimed under Section 5(2)(a)(i) should not legally have been disallow- ed when it was accepted as correct that it was the sale price of tax free goods? (8) Whether the Sales Tax Officer was entitled in law to refuse deduction under Section 5(2)(a)(i) of the Bihar Sales Tax Act, 1944, for the reasons stated by him? (9) Whether the learned Commissioner has erred in law in dis- posing of the appeal without considering the various evidence produced before him regarding the turnover of lac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the accounts of some branches to be unreliable, but on the basis of this inspection, he not only rejected the accounts of those branches as unreliable, but also rejected the accounts of other branches on the plea that similar state of affairs must have been existing. The assessment was reduced on certain points by the Commissioner in appeal and further enquiry on certain points was directed by him. For reasons stated in the order of this Court on the petitions of revision, further enquiry was ordered regarding the assessment of catechu; but for reasons noted in this order no further enquiry in respect of assessment on lac was ordered. The position is that in the absence of satisfactory accounts kept by the assessee, the assessing officer was bound to make assessment to the best of his judgment, and in making this kind of assessment an element of guess work cannot but creep in, and for this the respon- sibility must be on the assessee, particularly when the assessee is a well to do businessman who may be expected to know the rules and the law, and to keep a staff for the maintenance of correct accounts in the prescribed manner. After these preliminary observations, only a few co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmined the turnover on account of the sale of those goods at a round figure of Rs. 5 lakhs which under the circumstances he considered to be quite reasonable. The Commissioner of Sales Tax agreed with that assessment and up- held the figure so assumed by the Sales Tax Officer; and the Board of Revenue also in revision held that on this point there was no ground for interference. The assessment on the face of the order appears to be under Section 10(3) of the Sales Tax Act. It is contended by the assessee that the question of assessment under Section 10(3) of the Act only arises where there has been non-compliance with the terms of the notice under Section 10(2)(a). In this case, according to the contention of the learned counsel for the assessee there was no non- compliance with the terms of the notice given to the assessee to pro- duce his papers and books of accounts. It is pointed out that the relevant documents called for from the assessee, according to the terms of the notice, had been duly produced before the Sales Tax Autho- rities, and that being so, an assessment under Section 10(3) of the Act was unwarranted. On the other hand, it is suggested that the correct procedure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 23(2) of the Act, and consequently the assessment was not under Section 23(3) (1) (1925) 6 P.L.T. 555; A.I.R. 1925 Pat. 694. but under Section 23(4) of the Act. This, it was pointed out by their Lordships, was an incorrect assumption on the part of the Commis- sioner. There are no doubt some general observations made in the judgment which encouraged the argument of the learned counsel. It is to be noticed, however, that the Income-tax Officer had not in that case entirely disbelieved the books of accounts or the evidence adduced by the assessee in pursuance of the notice. The Income-tax Officer only thought that it was not conclusive on certain points. Therefore, it was not a case where there was a mere pretence of com- pliance with the terms of the notice by producing documents which were utterly unreliable. In the present case the order of the Sales Tax Officer indicates that he did not consider the documents to be at all reliable in regard to the sale of the goods in question and he was compelled to assume a figure of his own. That being so, there was really no compliance with the terms of the notice required by Sec- tion 10(2)(a) of the Sales Tax Act. It would be, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , are found to be quite unreliable so that the officer is unable to make an assessment on the basis of the documents produced, the taxing officer in such a case would be justified in making an assessment under Sec- tion 10(3) of the Act to the best of his judgment; because in sub- stance the assessee has failed "to comply with all the terms of a notice issued under sub-section (2)" of the Sales Tax Act. This view of mine is in consonance with an earlier view which this very Bench took in M.J.C. 4 of 1949 decided on the 5th of March, 1951, in which case also the decision in Raghunath Mahadeo v. Commissioner of Income-tax, Bihar and Orissa(1), cited above, was considered and distinguished. It would be useful in this context to advert to an important decision of the Judicial Committee of the Privy Council in Commissioner of In- come-tax v. Badridas Ramrai Shop(2), where their Lordships pointed out: "The officer is to make an assessment to the best of his judg- ment against a person who is in default as regards supplying infor- mation. He must not act dishonestly, or vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he "sale price" for the goods, though the dealer may himself choose to split up the amount and distribute it in the receipt under different heads. The valuable consideration, which moves from the purchaser to the dealer for the purchase of the goods, is the lump amount which he actually pays to the dealer in consideration of the goods sold to him; and except for the deductions permissible under the law, the whole of that amount can in law be regarded as the sale price for the goods. The aggregate amount of sale prices so received by the dealer during the taxable period would constitute his gross turnover during the period in question. Therefore, so long as the law does not place any burden on the purchaser for the sales tax payable by the dealer or authorise the dealer to collect the same from the purchaser, it has to be assumed in the eye of law that the entire amount paid by the purchaser is the sale price of the goods supplied. It was there- fore observed by Harries, C.J., in the decision referred to above that: "What the seller receives as valuable consideration from the buyer for the article is the sale price. As I have said, the sellers now-a-days make out a bill showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of the property and in consideration thereof. The act of the dealer in splitting up the amount under different heads does not, therefore, really affect the position so long as the Sales Tax Act itself does not recog- nise those payments as permissible deductions in the eye of law from the sale price itself. I have, therefore, no doubt that the decision quoted above, with which I respectfully agreed, fully governs the case, and the third question also must, therefore, be answered in the affirma- tive, namely, that the tax realised by the dealer should be added in arriving at the gross "turnover" for computing the taxable income of the dealer. I will now take up the second question which alone remains to be answered. The short facts are that the assessee claimed deduction under Section 5(2)(a)(i) of the Act to the tune of Rs. 1,24,135-5-0 in respect of goods which were declared to be tax-free under Section 6 of the Act. The Sales Tax Officer disallowed the deduction which he claimed because he held that the provisions of Rule 36(1) of the Bihar Sales Tax Rules, 1944, were not complied with. He pointed out certain irregularities in the receipts and the counterfoils as also the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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