D.M. Chandrashekhar, J.
1. Both these references arise out of a common order of the Additional Judge (Revisions), Sales Tax, Agra, in two revision petitions before him preferred by the same assessee.
2. The question referred by the Judge (Revisions) reads :
Whether, on the facts and in the circumstances of the case, when the account books were rejected, the disclosed turnover should have also not been accepted
3. The material facts, briefly stated, are these : The assessee is a dealer in shoes. For the assessment year 1965-66 it (the assessee) filed returns for assessments under the U. P. Sales Tax Act and the Central Sales Tax Act. It returned a turnover of Rs. 27,190.56 for assessment under the U. P. Sales Tax Act and a turnover of Rs. 1,44,737.10 for assessment under the Central Sales Tax Act.
4. At two surveys conducted by the sales tax authorities, it was found that the assessee had not maintained accounts regularly and that all its transactions were not shown in its books of account. The explanation of the assessee was also not believed by the sales tax authorities.
5. The assessing officer disbelieved the accounts maintained by the assessee and made best judgment assessments of its intra-State turnover and also inter-State turnover. The former was estimated at Rs. 61,998.80 and the latter at Rs. 1,57,366.57.
6. In the appeals preferred by the assessee, the appellate authority upheld the decision of the assessing authority in rejecting the books of account and in making best judgment assessment, However the appellate authority reduced the intra-State turnover to Rs. 50,000 and the inter-State turnover to Rs. 1,50,000.
7. The Judge (Revisions) also upheld the rejection of the books of account by the assessing authority and the making of best judgment assessments, yet he allowed the revision petitions holding that although the books of account were not reliable there was no justification for estimating the assessee's intra-State and inter-State turnovers at figures higher than what the assessee had returned. He noticed, inter alia, that in the assessment year 1965-66 the assessee had returned a substantially higher inter-State turnover than in the preceding year. He also observed that the decrease in the intra-State turnover as returned by the assessee in the year in question, as compared to that of the preceding year, might have been due to greater attention being paid by the assessee to inter-State transactions than to intra-State transactions during the assessment year in question.
8. In these references, the learned standing counsel appearing for the Commissioner of Sales Tax contended that once the books of account of the assessee were held to be unreliable, the assessing authority was entitled to make best judgment assessments and that the revising authority had no justification for interfering with the estimation of turnover made in best judgment assessments. The learned standing counsel also maintained that once the books of account of the assessee were rejected, the revising authority could not accept the turnovers returned by the assessee.
9. The learned standing counsel strongly relied on the observations made by the Supreme Court in Commissioner of Sales Tax, Madhya Pradesh v. H. M. Esufali H. M. Abdulali A.I.R. 1973 S.C. 2266. There, the books of account of the assessee were rejected as unreliable and in the reassessment proceedings the assessing authority had made best judgment assessments of the assessee's taxable turnover under the State Sales Tax Act and the taxable turnover under the Central Sales Tax Act at figures much higher than what the assessee had returned.
10. The decision of the assessing authority was upheld by the Board of Revenue except in regard to penalty. At the instance of the assessee, the Board of Revenue referred certain questions of law to the High Court. While answering those questions the High Court of Madhya Pradesh took the view that in a best judgment assessment the quantum of escaped turnover would be that which the assessing authority thinks is proved or is established. While reversing the decision of the Madhya Pradesh High Court, the Supreme Court observed:
In the case of 'best judgment' assessments, the courts will have to first see whether the accounts maintained by the assessee were rightly rejected as unreliable. If they come to the conclusion that they were rightly rejected, the next question that arises for consideration is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed.
11. The above observations of the Supreme Court were made with reference to the power of the High Court to interfere with best judgment assessments made by the assessing authority. These observations have no application to the power of the revising authority under the Sales Tax Act to substitute its discretion for the discretion of the assessing authority or the appellate authority in estimating the turnover. Under Section 10 of the U. P. Sales Tax Act the revising authority may examine not only the legality but also the propriety of an order of the assessing authority or the appellate authority. If, in its opinion, the estimate made by the assessing authority or the appellate authority of the turnover of an assessee even in a best judgment assessment was not proper, the revising authority has power to substitute its estimate of such turnover, for the estimate made by the assessing authority of the appellate authority.
12. We are also unable to accept the contention of the learned standing counsel that merely because the books of account of the assessee are rejected as unreliable, the turnover returned by the assessee must necessarily be rejected and that such turnover should be estimated at a higher figure than that returned by the assessee. In spite of such rejection of the assessee's books of account, whether the turnover returned by him should be accepted or whether a higher turnover should be estimated by the assessing authority must depend upon the facts and circumstances of each case. The revising authority has set out circumstances which, according to it, would show that the intra-State and inter-State turnovers returned by the assessee could be accepted as reasonable. Hence it cannot be said that the revising authority should not have accepted the turnovers returned by the assessee.
13. As a result of the foregoing discussion, our answer to the question referred to us, in each of these cases, is against the revenue and in favour of the assessee and is as follows :
On the facts and in the circumstances of the case, when the assessee's books of account were rejected, the turnover, as returned by the assessee, need not necessarily have been rejected but could be accepted if it appeared to be reasonable and proper.
14. As the assessee is absent and unrepresented we make no order as to costs in these two references.