R. M. Sahai, J. :- The question referred for the opinion of this Court is :
Whether there is any material for rejecting the account books of the assessee and making the estimate of net turnover as adopted by the Additional Judge (Revisions) and the break up thereof ?
2. The assessee, M/s. Ashok Stores, carried on business in hosiery and ready made garments. Its account books for the assessment years 1964-65, 1965-67 and 1966-67 were rejected by the assessing authority. The only evidence which formed the basis for such rejection consisted of four surveys held on 30-8-1963, 15-2-1965, 30-6-1965 and 7-8-1967. The Additional Judge (Revisions) himself held that the first and the last survey were not strictly relevant for these three assessment years. He took the view that 'they however indicated that the assessees conduct was not bona fide in recording its transaction.'
3. In the survey dated 30-8-1963 the surveying officer had reported that the assessee dealt in umbrellas also. In the grounds of appeal and the ground of revision the assessee had categorically denied that he was carrying on any business in umbrellas. It was urged before the appellate authority that the account books for 1963-64 were accepted. The Judge (Revisions) did not consider this fact, made a general observation that the 'Assessees conduct was not bona fide in finding its transaction' There was no finding in the assessment for the year 1963-64 that the assessee carried on business in umbrellas also.
4. In the other survey dated 7-8-1967 the only thing found against the assessee was a discrepancy between the cash on was a discrepancy between the cash on hand and the cash shown in the books of account to the extent of about Rs. 22.
5. During the survey dated 15-2-1965 at the residence of assessee, the pakki rokar was found posted upto 31-12-1964. The assessee explained the modus operandi followed by him as follows : All transactions were noted in rough cash book (kachi rokar). The pakki rokar was prepared from kachi rokar. The kachi rokar was complete and at the time of survey was at the shop.
6. The correctness of the above explanation has not been dispute either by the appellate authority or the Additional Judge (Revisions). The latter has merely observed 'If it becomes doubtful that the cash memo had been issued for all transactions even complete kachi rokar could not be of any help.'
7. In the survey dated 30-6-1965 it was found that the cash balance on hand did not tally with the balance as shown in the day book. Such discrepancy was only of Rs. 1.30.
8. The learned counsel for the assessee contended that when the Judge (Revisions) himself said that the two surveys on 30-8-1963 and 7-8-1967 were not strictly relevant for the assessment years 1964-65, 1965-66 and 1966-67, he should not have taken into consideration those two surveys for judging the assessees conduct. The learned counsel for the assessee placed reliance on the decisions, Commissioner of Income Tax vs. M/s. Doon Builders, Shambhu Ratan Shailendra Kumar vs. Commissioner, Sales Tax and an unreported decision M/s. Jagannath Diwan Chand, Agra vs. Commissioner, Sales Tax Lucknow.
9. On the other hand the learned Standing Counsel has strenuously contended that the Additional Judge (Revisions) has correctly applied the principles laid down by this court in a decision reported in Vishwanath Seth vs. Commissioner of Sales Tax. He maintained that the survey dated 30-8-1963, although not relevant for 1964-65, could be considered for judging the conduct of the assessee. According to him the nonmention of this survey in the statement of case is not materials and the answer to the question should be given on the findings recorded by the Additional Judge (Revisions). He further submitted that the mere fact that as a result of this survey the account books of the assessee were not rejected in 1963-64, is not a reason for repetition of mistake by the assessing authority in 1964-65.
10. The survey dated 30th August, 1963, was not considered in the assessment for the year 1963-64 and did not lead to rejection of account books in that year. Nor was the assessment for that year re-opened on the basis of that survey. The assessee is right in his submission that when his account books upto 1963-64 had been accepted, no adverse inference could be drawn on the basis of any alleged act or omission in the year.
11. So far the survey dated 15th February 1965 is concerned, it is undisputed that the Kachi rokar was upto date. The purpose of maintaining the Kachi rokar obviously is to note down then and there the transaction as they take place. If the Kachi rokar was complete, it cannot be said that the assessee was not maintaining his account books correctly. No defect was found in the Kachi rokar. The mere fact that the kachi rokar and the Pakki rokar were not found in the residence of the assessee at the time of the survey or that the entries in the Pakki rokar were not upto date could not, in our opinion be a ground for rejecting the account books. The Judge (Revisions) has observed :
'The Rokar on 15-2-1965 was found incomplete for which the argument advanced was that Kachi rokar being complete no adverse inference should be drawn from the incomplete rokar. If it becomes doubtful that the cash memo had been issued for all transactions even complete Kachi rokar could not be of any help.'
It is not clear that on what basis the Judge (Revisions) thought that cash memos had not been issued for all transactions. He has not referred to any transaction of any evidence in support of this finding except the survey dated 7th August, 1967. This survey being subsequent to the assessment year 1964-65, the alleged omission to issue cash memo in the year 1967 could not form the basis for an inference that the assessee must not have been issuing cash memo even in the assessment year 1964-65.
12. As stated earlier, in the survey dt. 80-6-65 the only irregularity or discrepancy noticed was the difference between the actual cash balance on hand and that shown in the account books to the extent of a paltry sum of Rs. 1.30. Such trivial discrepancy could not reasonably be the basis for rejecting the account books for the year 1965-66 or for any other year.
13. In the survey dated 7-8-1967 conducted by the Sales Tax Officer who made the assessment, the day book showed a cash of Rs. 126.96, whereas the cash on hand was Rs. 105. It was further stated in the report of that survey that a lady customer was leaving the shop without cash memo and that when the Sales Tax Officer went into the shop and disclosed his indentity, the person sitting at the counter prepared a cash memo.
14. The assessing authority rejected assessees explanation that certain expenses had not been entered in the day book. From the fact of preparing a cash memo after his visit to the assessees shop, the Sales Tax Officer inferred that such instances of not issuing cash memos must have been quite frequent. As we have already held that the alleged omission in the year 1967 to issued cash memo on one occasion, could not afford a reasonable basis for holding that the assessee was not issuing cash memos in many transactions in earlier years also and that the hence his books of account should be rejected.
15. In the view we take it is unnecessary to advert to the decisions relied on by learn counsel.
16. In our opinion there was thus no material on the basis of which the assessees account books could be rejected. We, therefore, answer the question referred to us in favour of the assessee and as follows :
'There was no material for rejecting the account books of the assessee and for estimating the net turnover by the Additional Judge (Revisions).'
17. The assessee shall be entitled to its costs which we assess at Rs. 100/-.