Seetharam Reddy, J.
1. These two T.R.Cs. could be disposed of by a common judgment as they involve common point and also decided by a common order. The assessee in T.R.C. No. 27 of 1981 is a dealer in general goods whereas the assessee in T.R.C. No. 39 of 1981 is a dealer in automobile parts.
2. Returns were filed by the petitioner-assessees giving the total turnover, the exemptions claimed and the net turnover. At the time of determination, they were put on notice and after scrutiny of the account books certain exemptions claimed were disallowed and also after taking into reckoning the spot inspection reports finding certain variations, some amounts were added to the turnovers. The petitioners also disclosed voluntarily, in the case of T.R.C. No. 39 of 1981 Rs. 25,000 worth of stock and in the case of T.R.C. No. 27 of 1981 Rs. 35,000 worth of stock. Hence, notices were given to show cause as to why they should not be subjected to best judgment assessments. Replies to the notices were furnished and thereafter the Commercial Tax Officer turning down the claims and objections raised by the petitioners, assessed them by adding the entire value of the stocks that were disclosed by the petitioners and determined the tax thereon. It is that addition of the value that is challenged in these revisions.
3. The contention of Sri Ramakrishnaiah, the learned counsel for the petitioners, is that these values which were disclosed pertain to the voluntary disclosure of income under the Voluntary Disclosure of Income and Wealth Act, 1976 (Act No. 8 of 1976), which received the assent of the President on 25th January, 1976, making effective from 8th October, 1975, land this was done by crediting the capital account and simultaneously debiting the goods account and therefore in the absence of any material to show that those goods were actually disposed off during the assessment year, namely, 1975-76, the same cannot be added to the total turnover at all as they must be exempted. The counter contentions for the Revenue were that goods worth Rs. 25,000 and Rs. 35,000 respectively were actually found part of the stock which was suppressed and the disclosure was made at the time when the inspection was done and therefore best judgment assessment was made adding this value to the total turnover of the dealer.
4. Before adverting to the contentions and the counter contentions of brief format of the case may be drawn.
5. For the purpose of analysis the material in regard to T.R.C. No. 39 of 1981 may be resorted to. The assessee in this case filed a return showing a gross turnover in the sum of Rs. 3,71,137.61 claiming an exemption of Rs. 1,07,125.43 and a net turnover of Rs. 2,64,012.18. The Commercial Tax Officer after due notice to the dealer and on verification modified the net turnover to Rs. 2,64,985.95. Then, on the basis of the inspection report wherein he found certain variations regarding sales of certain motor parts, he estimated the probable suppression at Rs. 1,600. Thereafter, the dealer voluntarily disclosed Rs. 25,000 said to be the value of goods credited to the capital account and debited to the goods account and purported to have been done on the ground of his voluntarily disclosing income under Act No. 8 of 1976. To this a notice was issued on 11th August, 1976, directing the dealer to file objections, which were filed on 23rd August, 1976.
6. In the objections it has been stated inter alia :
'Item : Rs. 28,750.00 : In the show cause notice it is proposed to add this by adding 15 per cent to Rs. 25,000 which was disclosed to income-tax department under the Voluntary Disclosure Scheme of Income and Wealth Ordinance, 1975. It is not known how this is considered as liable to sales tax. No reasons have been assigned in the notice. There is immunity provided under the Ordinance which may be ascertained from the Commissioner of Income tax ........... What ever is disclosed is due to difference in value of stock but not suppressed either in purchase or sales ........... the declarants will not be subjected to any other liability except the tax due on the disclosed amount at the specified rates.'
7. So the objections raised both with regard to the amount of Rs. 1,600 in respect of variations found at the time of inspection and also the voluntary disclosure of Rs. 25,000 to the income-tax department were found not tenable, and therefore, the net turnover was determined at Rs. 2,95,335.95 which included a turnover of Rs. 28,750 representing sale of stock worth Rs. 25,000 and 15 per cent gross profit thereon. On appeal to the Appellate Assistant Commissioner, it was held :
'It is not shown to me how and when these sales relating to the voluntary disclosure scheme stocks were recorded in their books of account, in the absence of which the assessing authority is perfectly justified in bringing this turnover to tax. Hence the appeal is dismissed.'
8. On further appeal to the Tribunal, the same was confirmed resulting in the dismissal of the second appeal.
9. Before adjudicating, the facts pertaining to this item of voluntary disclosure, since there were divergent views as to the mode reflecting in the books of account vis-a-vis the goods valued at Rs. 25,000 whether actually purchased and also sold or is it a mere book entry by debiting the goods account, may be cleared.
10. Sri Venkataramana, the learned counsel for the department, based on the observation of the Commercial Tax Officer in his assessment order, viz., 'the dealer disclosed voluntarily Rs. 25,000 worth of stock which are not accounted for in their accounts', and also that of the Appellate Tribunal, viz. :
'It is admitted before us that the appellants had certain undisclosed and unaccounted stocks. The plea denying liability to sales tax in respect of such stocks can legitimately be canvassed on the following grounds : ............... In the circumstances we have no hesitation whatsoever in concluding that the appellants had failed to establish the correctness and completeness of the turnover figures reported for assessment purposes and that the assessing authority was justified in proceeding to finalise the assessment on the basis of best of judgment assessment.',
11. Submitted that goods were actually sold. The reply filed in response to the show cause notice issued reads :
'It is not known how this is considered as liable to sales tax. No reasons have been assigned in the notice ....... Whatever is disclosed is due to difference in values of stock but not suppressed either in purchase or sales. There is immunity provided under the Ordinance which may be ascertained from the Commissioner of Income-tax.'
12. So, the argument of the learned Government Pleader apparently the loses sight of this Fact. There is no other material which supports the case of Revenue. Hence it is manifest that the value of Rs. 25,000 voluntarily disclosed by the dealer was only with reference to the income, disclosed under Act No. 8 of 1976 and that to subsequent to the Act having come into force which would be at the fag-end of the assessment year 1975-76. Even assuming that it formed part of the actual stock of goods, unless there is evidence to show that the stock said to have been purchased has been actually sold during the assessment year, as these goods attract tax at the point of first sale, the same cannot be reckoned as forming part of the turnover. Therefore, the principal question is whether the stock worth Rs. 25,000 or the value thereof, disclosed under voluntary disclosure scheme, has been actually sold during the year in question, so as to form part of the turnover; and so on whom the onus lies
13. Before adjudicating, we may usefully refer to the decision of the Supreme Court in Girdhari Lal Nannelal v. Sales Tax Commissioner : 109ITR726(SC) wherein the facts in short were that a cash-credit entry of Rs. 10,000 in the account books of the appellant-firm in the name of the wife of one of its partners was treated as income of the appellant out of concealed sales and added Rs. 1,00,000 to the turnover of the appellant on the basis that the sum of Rs. 10,000 represented 10 per cent of the profit. The explanation offered by the appellant that the sum of Rs. 10,000 was given by the partner of the firm to his wife to obtain her consent for his second marriage and that the amount was lying with here and had been deposited by her with the appellant was not accepted by the sales tax authorities, and the Court held 'that in order to impose liability upon the appellant for payment of sales tax by treating the amount of Rs. 10,000 as profits arising out of undisclosed sales of the appellant, two things had to be established : (i) the amount was the income of the appellant and not of the partner or his wife, (ii) the amount represented profits from income realised as a result of transactions liable to sales tax and not from other sources. The onus to prove the above two ingredients was upon the department. The fact that the appellant or its partner and his wife failed to adduce satisfactory or reasonable explanation with regard to the source of that amount would not in the absence of some further material have effect of discharging that onus and proving both the ingredients. In such a case no presumption arose that the amount represented the income of the appellant and not of the partner or his wife. It was necessary to produce more material in order to connect that amount with the income of the appellant as a result of sales. In the absence of such material, the mere absence of explanation regarding the source of the amount would not justify the conclusion that the amount represented profits of the appellant deriving from undisclosed sales'.
14. The observations of the Appellate Tribunal, viz., it is admitted before us that the appellants' had certain undisclosed and unaccounted stocks. The plea denying liability to sales tax in respect of such stocks can legitimately be canvassed on the following grounds :
(i) that the goods held in stock are not at all liable to tax either at the point of purchase or at the point of sale or such goods qualify for exemption under section 8 or 9 of the A.P.G.S.T. Act,
(ii) that the taxable event did not take place during the year under consideration,
(iii) that such goods were sold during the year had already been included in the sales turnover recorded in the books of account and were furnished to the department for assessment purposes.
15. The Appellate Tribunal quite apparently has misconceived both factually as well as legally. Firstly the very approach that the goods in question attracted to tax on purchase point is wholly misconceived, as it is not the case of the department either that the goods attracted tax at the purchase point. Now secondly, the burden has been thrown on the assessee to establish that the undisclosed item of income shown under the Voluntary Disclosure of Income and Wealth Act of 1976 represents the sales of the goods, and the too, during the assessment year in question. As is manifest from the decision referred to above, it would not be competent for the sales tax authorities to draw any presumption on the income representing the sale purported to have been disclosed under the voluntary disclosure of the Act that the sum represents the sales of the goods because the onus lies on the Revenue and not on the assessee. It is incomprehensible also on the basis of the facts of this case that admittedly this disclosure was made somewhere in the month of February or so of 1976, and therefore, it does not necessarily also follow that the amount so shown will represent the sales said to have been made by the end of 31st March, 1976, so as to fall within the assessment year, viz., 1975-76. The said disclosure in order to attract the sales tax, the department is obligated to establish by evidence that it pertains to the sales of the goods purchased and that too during that assessment year. None of these two has been established, and therefore, it would not be within the purview of the Revenue to add this item to the total turnover of the assessee.
16. From the foregoing, it is quite evident that the addition of turnover of Rs. 28,750 to the turnover of the petitioner-assessee herein is illegal, and therefore, the same has to be set aside. In the circumstances, the order under revision is set aside to the extent of item of Rs. 28,750 as added to the total turnover of the petitioner herein. Consequently the Commercial Tax Officer concerned is directed to revise the assessment by deleting the item of Rs. 28,750 from the total turnover and levy and collect the tax accordingly.
17. To the same effect, the Commercial Tax Officer shall now make the revised assessment in T.R.C. No. 27 of 1981, by deleting the item of Rs. 35,000 representing the disclosure made under Act No. 8 of 1976.
18. In the result, the two tax revision cases are allowed. No costs. Advocate's fee Rs. 250 in each.