TMI Blog1980 (4) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... as its accounting year. The returns filed by the petitioner for the above periods were not accepted by the department. The assessee was asked to furnish evidence in support of the returns and the petitioner's officers failing to satisfy the assessing officer, he resorted to best judgment assessment in which the taxable turnover was enhanced and hence the petitions for quashing them. Hereinbelow are given the figures of the respective years: 1973-74 Disclosed turnover Rs. 41,40,298.24 Assessed gross turnover Rs. 81,91,698.24 The taxable turnover Rs. 48,64,920.85 Additional tax demand Rs. 3,10,400.54 1974-75 Disclosed turnover Rs. 54,18,344.31 Assessed gross turnover Rs. 1,05,39,344.31 Assessed taxable turnover Rs. 63,75,365.46 Additional tax demand Rs. 3,98,428.89 1975-76 Disclosed turnover Rs. 51,36,120.49 Assessed gross turnover Rs. 1,04,47,780.69 Assessed taxable turnover Rs. 58,17,149.79 Additional tax demand Rs. 3,87,589.85 The grounds for rejecting the returns are virtually the same and so too the grounds of attack. The figures relating to the Central sales tax assessments for the years referred to above are: 1973-74 Disclosed turnover Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch banks to the petitioner and to pay over such balance to the Government treasury, these O.J.Cs. were filed to quash the assessments and the tax demands. Though the assessments and the tax demands have been challenged on various grounds, as mentioned in the petition, they need not be referred to, by and large repetitions as they are. Substantially they are to the effect that: (i) the proceedings before the assessing authority being a quasi-judicial proceeding, the taxing authority is bound to follow the principles of natural justice and rule of law and violation of the same render the order ab initio void and hence a nullity; (ii) tax demands based on such void orders are non est and there is no obligation to file any appeal against such void orders or demands; and (iii) there has been an erroneous usurpation of jurisdiction and, as such, a writ of certiorari can lie. 5.. In the counter filed on behalf of the opposite parties, the various alleged illegalities in the petition were specifically denied. It was asserted that the petitioner produced its books of account from time to time, participated in the assessment proceedings during which all the materials utilised agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed or omitted, he is bound to accept it, and if any such evidence is there, then an opportunity has to be given to the assessee to explain it and thereafter assessment made; (iii) the petitioner-company is not bound to keep accounts of its purchase of bamboos, caustic soda and consumption of electrical energy, etc. The taxing officer is also not competent to ask of the petitioner these accounts and even if the petitioner has done so, it is out of fear and not out of any obligation under law and, therefore, should not be considered to the petitioner's prejudice; (iv) the petitioner was not given any opportunity to explain the alleged anomaly in the proposed ultimate assessment; (v) extraneous, incorrect and irrelevant considerations, such as "the dealercompany is a habitual law-breaker for which they are penalised from time to time; repeatedly visited with penalty by the River Board for polluting the water of river Mahanadi; forest department imposing penalty for overfelling and illicit felling of bamboos", have moulded the assessment and, as such, they cannot stand; and (vi) on the above grounds there has been violation of natural justice and the assessment is violative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the returns have been filed beyond the prescribed date and yet the assessing authority takes them into consideration for which there is no express provision under section 12 of the Act, they overlap. The crucial point is if a situation for "best judgment assessment" has arisen or not. In the instant case, with the rejection of the returns consequent upon the rejection of the supporting materials, such a situation did emerge. So, there is nothing to quarrel about the assessment made under section 12(4). Besides, whether it is an assessment under section 12(3) or 12(4), if the assessing authority has power to do so and there is no inherent lack of jurisdiction, under what section he has made the assessment is immaterial. Rightly it has been said that "the mistaken mention of a particular section or the label or the nomenclature used is not determinative of the validity of an assessment" (see Ram Chand Sons v. Commissioner of Income-tax, U.P.[1967] 63 I.T.R. 252. "In order to substantiate a right to obtain a writ of prohibition from the High Court or from the Supreme Court, an applicant has to demonstrate total absence of jurisdiction to proceed on the part of the officer or author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound to keep the accounts regarding purchase of bamboos, softwood, consumption of electricity, etc., we are unable to accept. These are raw materials used by the company in the production of paper. If no accounts of those raw materials are maintained and when demanded not produced, the quantum of paper manufactured cannot be judged. It would be puerile to say that a manufacturer like the assessee is only to keep the accounts of its sales and nothing beyond that. If that be so, there would be no scope for checking the same and anything produced by the assessee is bound to be accepted unless the assessing officer has some credible information or material that some sale or sales have been suppressed which is extremely difficult to get. So, we are not impressed with this argument. (C) Point No. (iv).-It was contended that the assessee has not been given an opportunity to give evidence in rebuttal to the finding and, in fact, the petitioner was not at all made known what the assessing officer was going to utilise against it. In this context, reliance was placed on the case of G.K. Padmaraju v. Commissioner of Income-tax, Hyderabad[1959] 37 I.T.R. 365. What evidence or material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x[1959] 37 I.T.R. 151 (S.C.). do not, however, require that the order of the Tribunal must be examined sentence by sentence, through a microscope as it were, so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law. In considering probabilities properly arising from the facts alleged or proved, the Tribunal does not indulge in conjectures, surmises or suspicions." Thus, the sole point for consideration is whether the observations quoted above, viz., that the assessee is a habitual law-breaker, etc., have influenced the assessment. To this question our answer is in the negative as would be clear from the elaborate assessment orders now impugned. In support of our view on this point as well as on other factual aspect of the matter some relevant extracts from the assessment orders on O.S.T. are quoted hereunder: "In response to the notice under section 12(2) of the O.S.T. Act, the Accounts Executive of the company, Shri A.K. Mitra, the Mill Accountant, Shri B.C. Sahoo, Sri Samiran Chakraborti and Sri Tarapad Roy, both of them Assistants working in the head office of the company, Sri Y. Subba Rao, General Assistant wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hemselves. But allowing only 20 per cent moisture on bamboo and 30 per cent on wood following the above technical opinion, 45,872 M.T. and 3,170 M.T. of bamboo and wood were put into the manufacturing process during the year under assessment. Applying 2.5:1 production ratio, the total quantity of paper that was produced from the above bamboo and wood consumed comes to 19,616 M.T. whereas the dealer-company has shown the total production at 18,603 M.T." While examining the proportion of power consumed and paper produced from year to year, he detected wide discrepancies and when the representative of the company was confronted with this, he could not offer any reasonable explanation and so the assessing officer observed: "On being asked to prove his statement with reference to the actual production of different variety of paper from time to time, Shri Mitra stated that it was very difficult to do. Therefore, the books of account of the dealer-company are held as unintelligible so far as the proportion of consumption and production of paper is concerned." In respect of the various chemicals used in the manufacturing process, he came to the further finding that the dealer-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an honest assessment of the turnover of the company. The observations that the dealer-company enjoys a semimonopoly position in the market and the dealer-company has taken vast forest contract of bamboo on royalty from which basic raw material, i.e., bamboo, is extracted and utilised in the mill for production of paper, are very much germane; but not that the company is a habitual law-breaker or that it has been repeatedly visited with penalty to the tune of several lakhs by the River Board for polluting the water of river Mahanadi or that the forest department are imposing penalty for overfelling or illicit felling. We may add here that the estimate of production of the company at 20,000 M.T. has already been arrived at by the assessing officer at different stages earlier. So, on a scrutiny of the assessment order as a whole, we are unable to accept the contention that these extraneous and irrelevant matters have in any way influenced the judgment although we agree that it would have been proper if those observations were not there. Accordingly, this point is also decided against the assessee. (E) Point No. (vi).-It was argued with great elaborateness that the proceeding befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short time. We hesitate to believe prima facie that a dealer like the assessee has furnished bogus C forms. Given reasonable opportunity, we believe, it would rectify the defects in them. If none appeared on behalf of the assessee on the due date fixed for it, we think it is not because the forms were spurious but because they were unable to rectify the defects within that time. Accordingly, we would interfere in the C.S.T. cases and direct that the revenue should give another chance to the petitioner to claim deduction under valid C forms. Since in the meanwhile more than two years have passed, the learned assessing officer would do well to give one more chance to the assessee to produce valid C forms and then finalise the assessment according to law. Accordingly, O.J.C. Nos. 195, 196, 197, 204, 205 and 206 of 1977 are allowed, the assessments and demands quashed and cases remanded for reassessment on the lines indicated above. O.J.Cs. arising out of O.S.T. assessments are rejected and O.J.Cs. arising out of C.S.T. assessments are allowed as indicated in the order. Parties to bear their own costs in the circumstances of the cases. MOHANTY, J.-I agree. Ordered accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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