TMI Blog2001 (3) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 The Commercial Tax Officer found that the dealer did not maintain separate sales accounts for the taxable and exempted turnovers of pulses and therefore he took into account the purchase price of dal both local and outside and arrived at the turnover by adding 10 per cent gross profit to the purchase price. The petitioner-dealer reported the sales of gram dal Rs. 1,44,53,414.71, toor dal Rs. 26,69,950.10 and masoor dal Rs. 2,04,967.44 against their respective purchases of gram dal of Rs. 1,59,84,594.75, toor dal of Rs. 26,88,870.87 and masoor dal Rs. 2,03,569.28. The method adopted for arriving at the total turnover by the assessing officer had resulted in an addition of Rs. 31,29,641 relating to the gram dal, Rs. 18,958 relating to the masoor dal and Rs. 87,807 relating to toor dal. In addition, the assessing officer also made an addition of Rs. 1,26,580 relating to the sale of gram dall, which was said to have been purchased from a local dealer by name Sri Venkateswara Traders. The assessment was accordingly completed by the Commercial Tax Officer. The said assessment was assailed before the first appellate authority. The first appellate authority, though recorded in his ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intain separate accounts with reference to the purchases made locally and outside, the same would not vitiate the results declared by the dealer in its returns. It is also contended that the authorities did not reject the books of accounts or the return filed by the dealer, but only made an estimated addition to the turnover, for which there is absolutely no justification and there is no provision also in the Act. Therefore, the addition to the turnover is illegal and unjustified. The learned counsel also contended that the assessing officer did not find any defects either in the sale value or purchase value of any of the items. Merely because the sales turnover is less than the purchase turnover, it is not open to the assessing officer to estimate the sales turnover by adding 10 per cent to the gross profit. In order to resort to any estimation, the assessing officer has to reject the books of accounts, by recording valid reasons. In the absence of any such reasons recorded by the assessing officer, the method adopted by the assessing officer, which was confirmed by the appellate authority, is clearly contrary to the provisions of the Act and the same is also without jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... items purchased locally as well as outside, there is no dispute as the assessing authority has granted exemption in respect of the local purchases of dal, basing on the figures furnished by the petitioner-dealer. The reason that was recorded by the assessing officer for resorting to the estimated sales turnover was only that the petitioner did not maintain separate books of accounts with reference to the taxable and exempted turnover of the dals. No doubt, the said omission on the part of the dealer may be an omission, but such omission would not empower the assessing officer to resort to the estimation of the sales turnover. In so far as the identification of the turnovers relating to the purchases made from local and outside, there is absolutely no dispute, even in the absence of separate accounts that were being maintained by the dealer. When once the purchases made locally and outside are identifiable, even in the absence of separate accounts, there is absolutely no justification for the assessing officer to resort to the estimation of sales turnover. 8.. There is no dispute that the items in question are subject to tax/exemption either under item 130 of the First Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the local purchases. The purpose of maintaining separate registers as to the taxable and exempted turnover is only for the purpose of identification of the purchases, which are taxable and exempted. In the present case, there is no dispute as to the taxable and exempted turnovers are concerned. But, however, the assessing officer estimated the sales turnover by taking the purchases made both in the local and from outside by adding 10 per cent of the gross profit to the purchase value and thereafter deducted the exempted turnover from the total turnover and assessed the tax. The method adopted by the assessing officer is not proper and just. Though the said issue was contested before the first appellate authority, the first appellate authority merely stamped the addition made by the assessing officer without considering the contentions or the objections made by the dealer. The Tribunal also simply accepted the estimated addition to the sales tax turnover on the premise that the petitioner did not maintain separate accounts, but did not go into the issue what was the effect of nonmaintenance of the separate accounts when the taxable as well as exempted turnovers are identifiable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record of the previous year was taken as a yardstick for the present assessment order or how that assessment could be a substitute for information regarding the increase in assessment by the impugned order. The matter has been most carelessly dealt with by the sales tax authorities. It has been repeatedly said that even a best judgment assessment must be a bona fide assessment and must be based on some material which could reasonably lead to the conclusion arrived at." Saying so the orders under question were set aside. The next decision is in the case of J. Gopal Rao v. State of Orissa [1993] 88 STC 488. In this case, also the High Court of Orissa considered the best judgment assessment. It was held that material relating to one year cannot, without sufficient additional material, be utilised for estimating sales of another year. The admission of the petitioner that his daily sales ranged between Rs. 100 and Rs. 125 in February, 1982 was based to determine the sales for the assessment years 1979-80 and 1980-81 at Rs. 80 and Rs. 100 respectively and the same was held not sustainable. The next decision is in the case of K. Ramalinga Mudaliar Co. v. State [1992] 86 STC 475. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment assessment made by the assessing officer, but however, felt that the estimated gross profit at 30 per cent was excessive and therefore granted a partial relief of reduction at Rs. 60,000 to the taxable turnover. The assessee thereafter preferred revision to the Madras High Court. The Madras High Court, after considering the provisions of section 12(2) of the Tamil Nadu General Sales Tax Act, 1959, under which a best judgment assessment can be made by the assessing officer held that the best judgment assessment is not sustainable when the assessing officer failed to record that the return filed by the assessee is either incomplete or incorrect. Further, without rejecting the accounts and return, the assessing authority cannot take recourse to the best of judgment assessment. The High Court also observed that no finding has been recorded by the assessing authority as to which particular transaction had not been explained plausibly by the assessee. The addition to the turnover made by the assessing authority is not on any basis whatsoever but on his whims. Therefore, allowed the revision. 10.. A perusal of the above judgments, especially the judgment of the Madras High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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