C. S. P. Singh, J. - The Additional Judge (Revisions) Sales Tax, Bareilly Range, Bareilly has under section 11(4) of the U.P. Sales Tax referred the following question for our opinion :-
'Whether there was any material in support of the taxable turnover fixed by the Judge (Revision) for the assessment year 1966-67 ?'
2. There are two other reference viz. S.T.R. No. 422 of 1973 and S.T.R. No. 423 of 1973 relating to the years 1967-68 and 1968-69 while the present reference relates to the year 1966-67. The Judge (Revisions) disposed of the revisions for all these three assessment years by a common order and as such we propose to give a resume of all the three years in the present order for the sake of convenience.
3. The assessee is a dealer in gur, rab, oil seeds and food grains etc. For the year 1966-67, the assessee showed purchase of goods from unregistered dealers at Rs. 330-70 and sale of Gur to unregistered dealers as selling agents at Rs. 1,768.73. Sales of hemp were shown at Rs. 6,081.73. Sales tax liability on the aforesaid sales according to the return of the dealers, was to Rs. 104.95 and Rs. 121.64. As against the returned turnover, the Sales Tax Officer fixed the turnover of the first item at Rs. 1,50.000/- while that of hemp at Rs. 15,000/-. In the year 1967-68, the assessee showed a net turnover of purchase of gur at Rs. 4083.59 as against which the assessing authority fixed the turnover at Rs. 1,50,000/- for gur and for oil seeds at Rs. 20,000/-. For the year 1968-69, the assessee did not admit any taxable turnover but the assessing authority fixed the first purchase of gur and rab at Rs. 1,50,000/- and oil seeds at Rs. 20,000/-. Appeals filed by the assessee were dismissed.
4. From the record, it appears that the two surveys of the assessees shop were made, one on 29-7-1966 and the other on 29-1-1969. The first survey was relevant to the year 1966-67 and the other for the year 1968-69. No survey was made for the year 1967-68. In the survey made on 29-7-1966, the only defect found was that the assessees roker was posted upto 25-7-66 and the explanation for not making entries in the rokar on 26th, 27th and 28th July 1966 was that there had been no transactions on those dates, as the assessee dealt primarily in gur and no sale was made as it was rainy season. This explanation was not accepted by the Assessing Authority and by the Appellate Assistant Commissioner. The Judge revision accepted the rejection of the account books for the years 1966-67 by the subordinate authorities since no question relating to the rejection of the account books for the years 1966-67 has to be considered in the present reference, we have to take it that the accounts books were rightly rejected for the year 1966-67. For the years 1967-68 although there was no survey, the Judge (Revisions) held that inasmuch as the accounts for the years 1966-67 and 1968-69 had been rejected, a logical inference could be drawn that the accounts for the years 1967-68 were also incorrect. At this stage, it is necessary to point out that for the years 1967-68, one of the questions referred in S.T.R. 422 of 1973 relates to the rejection of the account books. So far as the years 1968-69 is concerned, a survey was made on 29-1-1969. It was found that transactions were recorded in 47 loose ships and two other papers. The Sales Tax Officer, however, returned these documents to the assessee. As the time of the assessment, the assessee produced only 21 slips out of 47 slips and stated that only 21 loose sheets of papers were recovered and not 47. The Assessing Authority rejected the accounts entries of transactions had not been produced by the assessee. Even as respects the 21 slips produced by the assessee, it was found that the transactions recorded on 19 slips only were entered in the account books while the transaction recorded on the two remaining slips were omitted. No explanation was also forthcoming about the omission of the transaction recorded in the two other papers.
5. At the appellate stage, the assessee produced the remaining 26 slips, which allegedly bore the initials of the surveying officer. The appellate authority, however, did not place any reliance on these, on the ground that in case they were genuine the assessee would not have withheld them. The Judge (Revisions) has accepted the reasons given by the subordinate authorities for rejecting of the account books for the years 1968-69. The ground given by the Judge (Revisions) for rejecting the accounts for the years 1967-68 is that inasmuch as the account books of the assessee had been rejected for the years 1966-67 and for 1968-69, the account books of the years 1967-68, which was of the intervening year could also not be accepted as one could infer from the aforesaid conduct of the assessee that accounts for that year also were not property maintained. Inasmuch as in the present case, we are concerned only with the question as to the fixation of the turnover, it is not necessary in this reference to consider the correctness of the grounds for rejection of the account books.
6. The Judge (Revisions) while fixing the turnover for all the three years has stated that the computation of the turnover was fraught with considerable difficulties. The Sales Tax Officer had not given any reason for the enhancement except that the assessee had recorded transactions on loose papers and declined to produce most of them and had also not cooperated with the Department. Thus the reason given by the Sales Tax Officer for enhancement of the turnover did not find favour with the Judge (revisions). He, however referred to the reason given by the Appellate Authority for the enhancement which was that because the non-taxable turnover of the assessee for the years 1966-67 was Rs. 3,00,931/- for the year 1967-68 Rs. 3,81,47/29 for the years 1968-69 Rs. 5,43,313/67 the taxable turnover situated by the S.T.O. was correct. A perusal of the judgment of the Judge (Revisions) shows that he did not choose to base his estimate on this principle, as he has in the latter part of this judgment held that the enhancement for the years 1966-67; & 1967-68 were entirely unjustified, for the reason that the past record of the assessee was clean and no sufficient material was found in the years 1966-67 and 1967-67, which might be adverse to the assessee. After coming to these conclusions, the Judge (Revisions) estimated the turnover for 1966-67 at Rs. 20,000/- for gur and rab and Rs. 10,000/- for hemp. For the years 1967-68, he estimated purchase of gur and rab at Rs. 20,000/- and oil seeds at Rs. 5,000/-. In respect of the year 1968-69, he fixed the turnover at Rs. 75,000/- for purchase of gur and rab and Rs. 15,000/- for hemp. The reasons for this estimate was the survey of 29th January 1969 and the conduct of the assessee which according to him was reprehensible.
7. We are unable to see how after holding that the enhancement for the years 1966-67 and 1967-68 were unjustified, the Judge (Revisions) could enhance the turnover without any further material on the record. The Judge (Revisions) has given a finding that there was no sufficient material adverse to the assessee in these two years. This being so, it cannot be said that there was any material on the record on the basis of which the enhancement made by the Judge (Revisions) could be founded. The rejection of the account books undoubtedly confers jurisdiction on the Assessing Authority to make an estimate of the assessees income to the best of their judgment, but the estimate cannot be based on mere speculation and conjectures. Some material by way of comparable cases or other relevant materials should be available for sustaining an estimate after rejection of the accounts. In the present case we find that there is no material on the record on the basis of which the estimate has been made. As regards the estimate for the years 1968-69, the enhancement is based on the survey of 29-1-1969 and also on the reprehensible conduct of the assessee. So far as the survey of 29-1-1969 is concerned, the Judge (Revisions) has found that out of 21 loose slips on which transactions were recorded, the transactions relating to 19 slips were accounted for. In the books, the transaction in respect of two slips were omitted from the accounts. No finding has been given nor any material is available on the record as to the quantum of the transactions contained in the two slips were not accounted for and neither was any finding recorded regarding the question of sales recorded in the 26 loose slips which were found at the time of the survey but were not produced by the assessee in the course of assessment. In case the estimate was to be based on the result of the survey, the proper course to adopt was to take into account the quantum of the sales recorded in the two slips which were not accounted for in the books of the assessee, and to make an estimate of the quantum of sales in respect of 26 slips which suppressed by the assessee possibly on the basis of the average sales. Mere reference to the survey of 21-1-1969 and the reprehensible conduct of the assessee cannot in law furnish material for arriving at a particular figure of turnover. Thus the estimates made for all the three years can be said to be based on no materials on the record.
8. For the reasons given above, we answer the question in the negative, in favour of the assessee and against the Department. The assessee is entitled to costs which we assess at Rs. 100/-.