R.K. Vijayvargiya, J.
1. By this reference under Section 44 of the M. P. General Sales Tax Act (hereinafter referred to as the Act), the Board of Revenue has referred the following questions of law for the opinion of this Court:
(1) Whether or not, on the facts and circumstances of the case, the difference between the turnover estimated by the Commissioner and the turnover assessed by the assessing authority is 'escaped assessment' ?
(2) Whether or not, on the facts and circumstances of the case, the power of the Commissioner of Sales Tax under Section 39(2) to enhance an assessment includes the power to bring to tax an amount which ought to have been determined on the basis of evidence on record or whether that power does not include the power to assess to tax an amount that has escaped assessment ?
(3) Whether, on the facts and circumstances of the case, the Commissioner acted in excess of his jurisdiction and competence in making a fresh assessment in best judgment and in not remanding the case to the assessing officer for making a fresh assessment on merits ?
2. The facts giving rise to this reference as set out in the statement of the case are as follows : The assessee is engaged in the business of manufacturing and selling cycle chain covers, stands and carriers. For the accounting period 1st January, 1964, to 31st December, 1964, the assessee was assessed to sales tax by order dated 30th October, 1965. According to this order, the turnover of the assessee was assessed at Rs. 1,79,300, the tax was assessed on that basis and a penalty of Rs. 5,000 under Section 43(1) of the Act, as it then stood, was imposed. This order was set aside in first appeal and the case was remanded by the order dated 28th October, 1966, by the Appellate Assistant Commissioner of Sales Tax, Indore. After remand the assessee was assessed to tax by order dated 27th July, 1967, passed by the Assistant Sales Tax Officer, Indore, Circle I, Indore, on the turnover of Rs. 1,02,000 as against the sum of Rs. 92,304 according to the books of account and a penalty of Rs. 300 under Section 43(1) of the Act was imposed. The Commissioner of Sales Tax considered that the assessing Officer in the course of assessment did not take into account the material available on record and the order passed by the assessing officer was erroneous and was prejudicial to the interest of the revenue. He, therefore, issued a notice to the assessee under Section 39(2) of the Act. After giving an opportunity of hearing to the assessee, the Commissioner estimated the gross turnover of the assessee at Rs. 1,76,360 and after giving a deduction of Rs. 78,916 on account of inter-State sales, the taxable turnover was determined at Rs. 97,444 as against Rs. 23,084 determined by the assessing officer. The assessee preferred an appeal against the order of the Commissioner under Section 39(3) of the Act before the Board of Revenue, which was dismissed by order dated 12th November, 1971. At the instance of the assessee, the Board of Revenue has referred the aforesaid questions of law for the opinion of this Court.
3. At the outset, it may be stated that both the learned counsel for the assessee and the department agreed and, in our opinion rightly, that the questions of law as framed by the learned Board of Revenue do not arise out of the order of the Board and that question No. (1) proposed by the assessee to the Board of Revenue in its application dated 9th March, 1972, is the question of law that arises out of the order of the Board of Revenue. We have therefore reframed the question with the agreement of the learned counsel for the parties. The question reframed by us is as follows :
Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the Commissioner had the power and jurisdiction to assess the escaped turnover ?
4. The learned counsel for the assessee contended that the Commissioner has jurisdiction to revise the assessment order under Section 39(2) of the Act only if he finds that on the materials on record he considers that the order passed in the case is erroneous in so far as it is prejudicial to the interest of the revenue. According to him, the Commissioner has no jurisdiction to act under the provisions of Section 39(2) of the Act if on consideration of the material de hors the record he comes to the conclusion that the order sought to be revised is erroneous. According to the learned counsel, in the present case, the Commissioner had acted on the basis of the material de hors the record and, therefore, the issuance of notice by him under Section 39(2) of the Act was without jurisdiction. He further contended that, in any event, the Commissioner had no power to enhance the assessment in the circumstances of the case and that if he came to the conclusion that the order was erroneous and prejudicial to the interest of the revenue and a further enquiry was necessary, he ought to have set aside the order of assessment and remanded the case for fresh assessment.
5. Having heard the learned counsel for the parties we are of the opinion that the contentions of the learned counsel for the assessee cannot be upheld. The learned counsel for the assessee is not right in his submission that the Commissioner acted on the material de hors the record. In the statement of the case it is stated that the Commissioner of Sales Tax considered that the assessing officer in the course of assessment did not take into account material available on record, particularly regarding two transactions, namely, (1) an undisclosed payment of Rs. 11,853.52 which, according to the assessee, was the money paid by one of the partners for taking delivery of the goods, but which was not recorded in the books of account of the assessee as a credit entry in favour of the partner and (2) the estimate of reasonable production out of the total quantity of iron sheets used in the manufacture of the goods sold by the assessee, was not correctly made. Thus it is clear that on the material available on record the Commissioner considered the order of assessment to be erroneous in so far as it was prejudicial to the interest of the revenue and, therefore, he had jurisdiction to proceed under Section 39(2) of the Act.
6. The second contention of the learned counsel for the assessee also has no force. The scope of Section 39(2) of the Act is very wide. If the Commissioner has jurisdiction to proceed under Section 39(2) of the Act, power has been given to him, after giving the dealer or person an opportunity of being heard, to make or cause to be made such enquiry as he deems necessary and to pass such orders thereon as the circumstances of the case justify including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. Therefore, the Commissioner himself has the power to make an enquiry and enhance or modify the assessment. He has also the power to cancel the assessment and direct a fresh assessment, but it is left to his discretion to adopt a course which he finds appropriate in the circumstances of the case. In the present case, the Commissioner himself, after giving the assessee an opportunity of being heard, made an enquiry and passed an order enhancing the assessment. It cannot be said that the Commissioner had no jurisdiction to pass the impugned order. The order passed by the Commissioner was considered on merit by the Board of Revenue in the appeal preferred by the assessee and was upheld. In the circumstances, we are unable to agree with the contention of the learned counsel for the assessee that the Commissioner himself had no power to pass an order enhancing the assessment and he could only cancel the assessment- and remand the case for fresh assessment. In this view of the matter, it is not necessary to refer to the decisions cited by the learned counsel for the assessee, which are distinguishable on facts.
7. As a result of the discussion aforesaid, our answer to the question reframed by us is in the affirmative and against the assessee. In the circumstances of the case, there shall be no order as to costs of this reference.