TMI Blog1987 (1) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... revision petitioner preferred an Appeal No. 876 of 1977 before the Appellate Assistant Commissioner, Salem and it was transferred to the file of the Appellate Assistant Commissioner, Vellore and numbered as Appeal No. 959 of 1977. The Appellate Assistant Commissioner did not agree with the contentions of the revision petitioner herein and dismissed the appeal. Aggrieved by the said order, the second appeal was preferred before the Tribunal. On the point whether the order of the Appellate Assistant Commissioner is liable to be set aside, the Tribunal came to the conclusion that the officers were justified in not giving a relief to be assessed under section 7 also and also rejecting the contention raised on behalf of the revision petitioner before it that there are circumstances warranting the assessing authorities as well as the lower appellate authority to assess on the basis of the "best judgment assessment". It is seen from the order of the Tribunal under revision that the Tribunal endorsed the opinion of the assessing authorities as well as the lower appellate authority that rule 26(14) of the Tamil Nadu General Sales Tax Rules, 1959 has not been complied with by the revision pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n petitioner has shown only 1 per cent gross profit, the Tribunal rejected the account maintained by the revision petitioner. The Tribunal has also observed that the contention that the revision petitioner herein is new in the business and so there is no profit cannot be accepted. The Tribunal further observed that the officers below have chosen to add only 20 per cent for probable omissions, and similarly the addition of 20 per cent towards gross profit is also normal in this line of business. According to the Tribunal, since the accounts have not been properly maintained, 20 per cent addition is very nominal, and so the revision petitioner herein is not entitled to any relief. So, the Tribunal confirmed the assessment made by the assessing authorities which in turn was confirmed by the Appellate Assistant Commissioner. Before the Tribunal it is urged that the revision petitioner was not even given an opportunity for assessment under section 7; but nowhere before the officer below and even before the Tribunal, the revision petitioner herein made a specific offer to be assessed under section 7 and therefore, the Tribunal held that the officers below were justified in not giving a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no stock discrepancy or any other similar irregularity was found at any time during any of the surprise inspections made in the business premises during the year under dispute. It is finally contended on behalf of the revision petitioner that the Tribunal erred in holding that the petitioner did not offer for compounding tax under section 7 at least before the Tribunal, and in this, the Tribunal has ignored the grounds of appeal raised before it. In other words, it is contended that the Tribunal erroneously decided the question of law as to taxation under section 7 in the instant case, and it failed to see that the revision petitioner could not have opted so before the assessing officer within the time prescribed. In support of the contention raised on behalf of the revision petitioner, Mrs. Chitra Venkataraman, the learned counsel for the revision petitioner, refers to the decisions in R.M.P. Perianna Pillai Co. v. Commissioner of Income-tax [1961] 42 ITR 370 (Mad.), Veeriah Reddiar v. Commissioner of Income-tax [1960] 38 ITR 152 (Ker) and State of Tamil Nadu v. Arulmurugan and Co. [1982] 51 STC 381 (Mad.) [FB] at page 388. The decision in Ramayana Printing Works v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales Tax Rules, 1959 reads as follows: "26. (14) Every producer or manufacturer (other than a manufacturer of jewellery) shall maintain, in addition to the other accounts maintained in the usual course of his business and in accordance with the other sub-rules, an account in form XXX showing the production-cum-stock particulars of the raw materials used and the finished products manufactured by him: Provided that a producer or manufacturer may maintain a productioncum-stock account in any other form so long as it contains all the substantial information that is required in form XXX prescribed in this sub-rule." Proviso to rule 26(14) was added by S.R.O. No. A-270 of 1977 dated 2nd September, 1977, and the assessment in the instant case before us is 1976-77, and as such the said proviso is not applicable to the facts of the instant case before us. In R.M.P. Perianna Pillai Co. v. Commissioner of Income-tax [1961] 42 ITR 370 (Mad.) it was held that the system of accounting adopted by an assessee cannot be rejected under the proviso to section 13 of the Incometax Act on the only ground that the gross profits disclosed by his books were low and compared unfavourably with those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit brought out in the accounts is not the true figure for income-tax purposes the true figure can be accurately deduced therefrom. The simplest case would be where it appears on the face of the accounts that a stated deduction has been made for the purpose of a reserve. But there may well be more complicated cases in which, nevertheless, it is possible to deduce the true profit from the accounts, and the judgment of the Income-tax Officer under the proviso must be properly exercised. It is misleading to describe the duty of the Income-tax Officer as a discretionary power.'" With respect to the contention raised by the learned counsel for the revision petitioner regarding the jurisdiction of the appellate authority, she has relied on the decision in State of Tamil Nadu v. Arulmurugan and Co. [1982] 51 STC 381 (Mad.) [FB] at pages 388 and 389, which runs as follows: "..........The jurisdiction of an appellate authority under the Tamil Nadu General Sales Tax Act, 1959, includes the power to confirm, reduce, enhance, or annul, the assessment. It also includes the power to set aside the assessment with a direction to the assessing authority to make a fresh assessment, and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any other fiscal authority who are in seisin of the assessment, either in appeal, or in revision or in any other proceeding, cannot exercise a like power. The fact that the appellate authority is not expressly mentioned in the provision conferring the enabling power, does not mean that the legislature intended to exclude that authority from the purview of the provision." In the instant case before us, we find that the gross profit is only Rs. 386.32 for the whole year, as seen from the order of the assessing authority, for a net purchase value of Rs. 36,160.26. A careful reading of the above decisions together with the decisions referred to by the learned Additional Government Pleader, we are inclined to hold that the percentage of profit, namely, 1 per cent in the instant case before us, though may be "trifling" for the assessing officer, cannot afford as a ground for coming to an irresistible conclusion that there has been sales suppression on the part of the revision petitioner. For the proposal on the part of the assessing officer to reject the accounts maintained by the revision petitioner herein, we find that no adequate reasons had been given by the assessing authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in this line. This Court has been repeatedly pointing out that even a best judgment assessment cannot be a wild guess but a reasonable and justifiable guess based on some material at least. As we have pointed out earlier, in this case there was absolutely no material by which one can justifiably say an addition of 20 per cent to the purchase turnover was reasonable. Further, in the Full Bench judgment in Kathiresan Yarn Stores v. State of Tamil Nadu [1978] 42 STC 121 this Court had held that the mere fact that there is a best judgment assessment, particularly when the assessment is based on the inference flowing from the inability of the assessee to establish the case pleaded by him, will not be sufficient for the purpose of imposition of penalty, for the degree of proof required for the imposition of penalty is quite different from and is of a much higher order than that required for the purpose of making a best judgment assessment. The Full Bench further observed that though an estimate made on best judgment basis may be legal, for the purpose of imposing penalty something more concrete is required which would enable the judicial mind to reach the conclusion that the dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
