N. Kumarayya, Ag. C.J.
1. This revision petition is directed against the order of the Appellate Tribunal, dated 21st January, 1963, whereby the Appellate Tribunal rejected the claim of the assessee that the 'test-check-cum-muster roll method' adopted by the assessing authority in arriving at the total turnover in the assessment based on best judgment is not legal.
2. The assessee Sri Laxmi Satyanarayana Rice Mill a firm dealing in paddy and its by-products, barn and chittu at Kolakalur filed its return for the year 1957-58 showing a gross turnover of Rs. 1,91,907-14-6. The assessing authority found that the firm in its return failed to account for 30 bags of paddy purchased on 6th August, 1957. Further, in view of the results obtained by a 'test-check-cum-muster roll method' as regards the capacity of the mill also, it reached the conclusion that the turnover entered in the return for that year was grossly low. It, therefore, believed that the return was incomplete and incorrect and proceeded to determine the turnover and make the assessment to the best of its judgment. For determining the true turnover, the assessing officer took into account the total number of shelling hours as could be ascertained from the register and also the number of workers employed on the 'jalladu' by the firm. Of course, there were other departments in which several other workers were employed for various operations but as the experiment was confined to 'jalladu' taking into account 4 or 5 hours of work every day only the persons who had worked at 'jalladu' were taken into consideration and conclusion was reached as to the turnover for the year. Thus, the basis of the best judgment assessment was the 'test-check-cum-muster roll method'. Exception was taken to this method in appeal on various grounds. It was urged that the capacity of the mill would not be uniform as it would vary from paddy to paddy, and from time to time, that the muster rolls indicated the attendance of workers, but not the number of hours that the mill actually worked and that all the hours should not have been taken to have been used only to shell paddy. All these contentions were rejected by the appellate authority on the ground that the experiment was conducted actually by the officers and the appellants together and that only shelling hours were taken into consideration, as they were material for determination of turnover. The Appellate Tribunal also agreed with the view taken by the appellate officer. It observed that the attendance of only those workers who worked on 'jalladu' was taken into consideration by the assessing authority and that the working capacity of the mill only for 4 or 5 hours a day was ascertained. Multiplying the turnover as determined in the experiment made by the number of days on which attendance was marked for the workers who worked on 'jalladu' the total capacity of the mill in converting paddy into rice was determined. The results showed that the return submitted indicated a grossly low out-turn. On the question whether a 'test-check-cum-muster roll method' experiment was a reliable method of ascertaining the correct annual output, the Tribunal said that this test was permissible by law and the assessing authority was at liberty to adopt any method which would help him in coming to a correct conclusion. It was open to him to resolve how and in what manner he should and could procure information relating to the business, the turnover of which he was called upon to determine for purpose of assessment. It further held that no exception can be taken to the method employed. On this basis, it rejected the contention of the assessee.
3. The method followed by the assessing authority seems to have been based on the instructions of the Board of Revenue which were given to the authorities concerned in order to arrest evasion of tax in paddy and rice trade. Indeed, these instructions were carried out by various officers who even revised the previous assessments for 1954-55 and 1955-56 and finalised assessments for 1956-57. On the representation of the millers, the Government after giving careful consideration, came to the conclusion that the reopening of past assessments or making original assessments for the past years on the basis of instructions issued by the Board of Revenue in 1957 would result in considerable hardship to the millers and it would be proper if the instructions were made applicable to, only for the period following and not preceding the date of issue of instructions. Consequently, the Government directed that collection of excess tax, if any, levied for the period 1954-55, 1955-56 or 1956-57 by the application of 'test-check-cum-muster roll method' or on the basis of consumption of electricity following instructions issued by the Board, be waived. Due effect seems to have been given to these instructions in all such cases. The contention of Mr. Rajeswara Rao is that this is the only case which could not get the benefit of the G.O. as it related to the year 1957-58. He, however, reiterates the contention that was taken on behalf of the assessee before the appellate authority and also the Appellate Tribunal that the method adopted is not a satisfactory method and indeed that was the reason why this method was not followed for the previous assessment years. It is also argued that even for the later years, this method was not adhered to. This position is more or less conceded by the learned Government Pleader who states that in later years, the Government provided for a more effective measure by introducing Rule 45-A to ascertain the capacity and determine the turnover.
4. The question now is whether the method followed for ascertainment of the correct turnover can be said to be a reliable and a correct method for determining the true turnover. Of course, a further contention was raised that this was not a case where the assessing authority could resort to best judgment basis without holding that the return was incorrect or incomplete. It was argued that the assessing authority did not find fault with the return filed. We do not think that this argument is well-founded for, both the assessing and appellate authorities have said that there was a suppression of certain bags of paddy which cast doubt on the correctness of the return and thus entitled the assessing authority to come to his best judgment. The best judgment assessment resorted to therefore was warranted by the circumstances of the case. But the only point that remains to be determined is whether the 'test-check-cum-muster roll method' resorted to, could lead to dependable or satisfactory results, so that no undue harm or hardship could be caused to the assessee. Of course, in best judgment cases, there may be some amount of guess-work as well, but that does not mean that a method which is likely to result in much prejudice should be resorted to. As already noticed, the Government did not think that it was a reliable method as it would work hardship on the assessees who were assessed to tax in former years. In fact, the revised assessments for the previous years were withdrawn and this method was even discarded after a short while. If much hardship was caused to the assessees in relation to the revision of previous assessments, there is no reason why the same results would not follow in relation to subsequent assessments as well, if the same method is adopted. One would do well to bear in mind that the capacity of the mill would not be uniform and is bound to vary from paddy to paddy and also the capacity of the workers will not remain the same throughout the day. There are various other elements which this test does not take into account and does not make allowance therefor.