Madhava Reddy, J.
1. The Special Assistant Commercial Tax Officer (Evasions), Nellore, inspected the business premises of the petitioner-assessee on 18th June, 1964, and found three way bills for purchase of paddy not accounted for in the petitioner's account books. Two of those way bills were dated 16th June, 1964, for goods worth Rs. 4,650 and the 3rd way bill is dated 17th June, 1964, for goods worth Rs. 1,500.
2. The petitioner returned a gross and net turnover for his business for 1964-65 as Rs. 7,05,417.84 and Rs. 6,85,813.56 respectively and claimed a deduction on a turnover of Rs. 19,604.18. After verification of the accounts and calculating the admissible deductions, the net turnover liable to tax was found to be Rs. 6,68,277.96, but in view of the way bills found unaccounted for on inspection by the Special Assistant Commercial Tax Officer (Evasions), Nellore Division, on 18th June, 1964, the Commercial Tax Officer issued a notice No. Al. 837/64-65 dated 30th November, 1965, informing the petitioner that the turnover revealed by the petitioner's accounts cannot be accepted and holding that the goods represented by the above-mentioned way bills were goods suppressed and not brought to account. The total quantity of paddy represented by the way bills worked out to half of the total purchases made by the petitioner on each day. He, therefore, estimated the suppression of paddy purchases for the year 1964-65 as half of the total purchases and by that notice proposed to assess the petitioner on the turnover disclosed by the petitioner's accounts plus an additional estimated suppression of paddy at one half of the said purchases and called upon the petitioner to file his objections.
3. In response to the said notice, the petitioner objected to the addition and represented that the consignments covered by three way bills passed through the check post and as such the said turnover could not be deemed to have been suppressed. He further explained that as the clerk who normally wrote the accounts was absent from duty, the bills could not be entered in the accounts. The Commercial Tax Officer by his order dated 15th March, 1966, rejected the assessee's contention and determined the turnover by estimating the suppression and purchases of rice, broken rice and bran as proposed by him. The assessee-petitioner preferred an appeal to the Assistant Commissioner which was rejected by an order dated 29th October, 1966. In view of the provisions of Section 21(6) of the Andhra Pradesh General Sales Tax Act, the petitioner was required to pay the disputed tax in order that his appeal may be entertained by the Tribunal, unless the Deputy Commissioner continued the stay of collection of tax. But the petitioner states that in the instant case the Deputy Commissioner could not pass any order continuing the stay as the Assistant Commissioner before whom a petition for stay was filed pending the appeal before him, did not pass any order on the stay petition but disposed of the appeal as well as the stay petition on the same day. In those circumstances he invoked the jurisdiction of this court to quash the assessment order and the order of the Appellate Assistant Commissioner.
4. In this petition, it is contended by Mr. S. Dasaratharama Reddy, learned counsel for the petitioner, that the Commercial Tax Officer having accepted that the failure to enter the way bills was not properly accounted for, could not make it the basis for estimating the turnover. It is also contended that assuming that the assessee failed to properly bring to account the stock represented by the way bills, the Commercial Tax Officer was not justified in adding 50 per cent. of the turnover returned by the petitioner in making the assessment order. He ought to have made a proper enquiry and made a reasonable estimate of the petitioner's turnover and ought not to have made an arbitrary addition to the turnover in making the assessment. However, from a reading of the order of the Commercial Tax Officer and that of the Assistant Commissioner, it is clear that they did not accept the petitioner's explanation that the turnover represented by the way bills could not be brought to account on the relevant dates on account of the absence of the clerk attending to the accounts. It was found by both the authorities that other entries in the account books were made on those days. In those circumstances, we cannot hold that the commercial tax authorities were not justified in rejecting the explanation of the petitioner and in holding that there was suppression of accounts.
5. The further contention of Mr. Dasaratharama Reddy, learned counsel for the petitioner, however, is that even if it is assumed that there was suppression of those way bills on those two days, i.e., 16th and 17th of June, 1964, it cannot be held that on every day of the relevant year, there has been such a suppression. He ought to have made an enquiry before proceeding to make a best judgment. There was no other material for the Commercial Tax Officer to assume that there was such a suppression throughout the year so as to justify the addition of 50 per cent. turnover to the total turnover returned by the petitioner. It is urged that the Commercial Tax Officer could have only added the turnover represented by the way bills and not any other; he was not empowered to add anything over and above what was represented by the said way bills.
6. Under section 14(1) of the Act when the Commercial Tax Officer finds that the return filed by the dealer is incorrect or incomplete he may after issuing a notice to the dealer make such enquiry as he may consider necessary and determine, to the best of his judgment, the turnover. On the basis of the way bills which have not been brought to account, it is permissible for the Commercial Tax Officer to presume that not merely the turnover represented by the said way bills but also other similar turnover has escaped assessment and proceed to estimate what the quantum of that turnover is. The contention that the Commercial Tax Officer had no jurisdiction or was not justified in making any addition over and above the turnover represented by the way bills must, therefore, be rejected. However, Section 14(1) does not vest jurisdiction in the Commercial Tax Officer to arbitrarily determine the turnover when he finds that the return is incorrect or incomplete. He must make a genuine effort to estimate to the best of his judgment what the actual turnover of the assessee might have been. Section 14(1) requires him to make an enquiry which necessarily postulates that he must take all the relevant factors into consideration in determining the turnover. The enquiry contemplated by Section 14(4) cannot be made an empty formality. At such an enquiry the petitioner must be given a reasonable opportunity to satisfy the Commercial Tax Officer that though the way bills found were not brought to account, there are other factors which ought to have been taken into account before arriving at a conclusion as to whether or not there was similar suppression. It must be pointed out, that especially in the business of puchases and sales of paddy and rice, it is unreasonable to estimate that purchases and sales would be uniform throughout the year. What may have been the turnover of a particular dealer in paddy and rice could be assessed with reference to his previous returns for the previous years and also with reference to the various other records, statements and returns which such a dealer is required to maintain and submit under the several control orders issued under the Essential Commodities Act which were in force during the relevant year. Admittedly no such enquiry was made. It is seen that the suppression of turnover was estimated by addition of 50 per cent. of the turnover returned by the petitioner solely on the basis of the three way bills found to have been unaccounted on the inspection of the petitioner's business premises. In these circumstances, it cannot be held that an enquiry as contemplated under Section 14(1) of the Act was held by the authority concerned before making the best judgment assessment. The assessment must be held to be arbitrary and contrary to the provisions of Section 14(1) of the Act. The order of the Assistant Commissioner upholding the said assessment must be held to be unsustainable for the same reason. The impugned order of the Commercial Tax Officer and that of the Assistant Commissioner passed on appeal are therefore quashed and the matter is remitted to the Commercial Tax Officer for fresh disposal according to law in the light of the observations made above.
7. The writ petition is accordingly allowed with costs.