Govinda Bhat, J.
1. This is a revision petition preferred by the assessee under the Mysore Sales Tax Act, 1957, and it relates to the period 19th November, 1963, to 4th November, 1964.
2. The assessee is a bamboo merchant at Hubli. He filed a return disclosing a total turnover of Rs. 78,479.25, and a taxable turnover of Rs. 4,655. The Intelligence Department of the Commercial Tax Department discovered from some books and other papers seized from the dealer that he had suppressed his turnover, both the total turnover as well as the taxable turnover. When that discovery was made, the petitioner filed a revised return disclosing a total turnover of Rs. 1,32,425.92 and a taxable turnover of Rs. 50,627.90. The Commercial Tax Officer, by his order dated 30th September, 1966, made an order of assessment on the best of judgment basis. He rejected the return and computed the total turnover as well as the taxable turnover by the addition of Rs. 45,000 to the total turnover and Rs. 40,000 to the taxable turnover. He found that the returns submitted and the accounts produced were incomplete and unreliable. Then, he proceeded to state as follows :
'Considering the nature and volume of business and the method of evasion adopted by the dealer, his total and taxable turnovers are estimated on the following basis : Rs. P. (1) Sales as per account books 79,541.15 (2) Add local sales detected as per the note book 39,665.52 (3) Add inter-State sales detected from bank accounts in the names of F. B. Hebballi and G. B. Hebballi. 13,219.25 -------------- Total 1,32,425.92 -------------- ADD : for undisclosed sales : (i) Local sales 40,000.00 (ii) Inter-State sales 5,000.00 ------------- 45,000.00 -------------- G.T.O. Sales 1,77,425.92 ---------------
3. The Commercial Tax Officer gave no reasons for making the additions referred to above.
4. The appeal preferred by the assessee to the Deputy Commissioner of Commercial Taxes and a second appeal to the Mysore Sales Tax Appellate Tribunal were unsuccessful. Hence, he filed the above revision petition.
5. The Tribunal has supported the order of assessment and the reasons for the same may be stated in the words of the Tribunal appearing in paragraph 4 of its order :
'But the next question remains, namely, what could have been the probable suppressions in the turnover. The magnitude of such suppression is anybody's guess. It might be several lakhs, or there may not be any suppression. But the conduct of the appellant has provided a legitimate basis to think that there might be some more transactions which the department has not been able to detect and unearth. In such circumstances, the only humanly possible method of determining the turnover is to make an honest guess. It must have some rational basis and cannot be whimsical or arbitrary. In the original return, the appellant has disclosed the total turnover of Rs. 78,479.25 and the taxable turnover of Rs. 4,655.00. After the detection of the suppressions, he disclosed a total turnover of Rs. 1,32,425.92 and taxable turnover of Rs. 50,627.90. On a comparison of these two figures it is evident that the total turnover suppressed works out to about 66 per cent. and the taxable turnover by more than 11 times the declared taxable turnover (original taxable turnover declared is Rs. 4,655.00 and the revised taxable turnover is at 50,627.90). In view of the fact that the detected turnover is not contained in regularly maintained books of accounts, there is scope to believe that there are transactions outside those note books also which the department is not able to detect. Now, the additions are only to the extent of 33 per cent. to the total declared turnover and 16 per cent. to the taxable turnover which compared to the total turnover (sic). The Commercial Tax Officer who had the advantage of visiting the business premises and also knowing the other relevant facts of the business has thought it fit to enhance the turnover to the extent indicated above. We have no material to say that the enhancement is irrational or arbitrary. Hence, we find no reason to interfere with the order of the authorities below'.
6. It is seen from the above extract that the Tribunal was of the opinion that the suppressions may amount to several lakhs or there may not be any suppression. In such a situation, the benefit should go to the assessee and not to the department. There is absolutely no legal basis for the method of estimating the turnover on the best of judgment basis. The best of judgment basis is not an arbitrary assessment. It may take into consideration the turnover of the assessee in the previous years and the turnover of similar dealers. The Tribunal has stated that the Commercial Tax Officer who had the advantage of visiting the business premises and also knowing the other relevant facts of the business, had thought it fit to enhance the turnover to the extent indicated above. But his assessment order does not disclose the basis on which the additions were made. Any such addition cannot rest on the subjective satisfaction of the assessing authority. The material on the basis of which the additions are made should be disclosed to the assessee so that he may have a reasonable opportunity to repudiate the same and the order must state the reasons.
7. In our judgment, the additions made to the gross and taxable turnovers of the dealer are highly arbitrary and cannot be supported.
8. Therefore, we allow this petition and modify the orders of the Tribunal and the authorities below by deleting the additions of Rs. 45,000 and Rs. 40,000 to the gross turnover and the taxable turnover respectively. The result is that the taxable turnover of the assessee should be determined at Rs. 50,627.90. The assessing authority is directed to issue a fresh demand notice on the basis of this judgment.
9. Ordered accordingly. The petitioner is entitled to his costs. Advocate's fee Rs. 100.
10. Petition allowed.