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The State of Madras Vs. S.J. Mehta - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 188 of 1969 and Revision No. 119 of 1969
Judge
Reported in[1974]34STC197(Mad)
AppellantThe State of Madras
RespondentS.J. Mehta
Appellant AdvocateK. Venkataswami, First Assistant Government Pleader (Tax)
Respondent AdvocateC. Venkataraman, Adv.
DispositionPetition allowed
Excerpt:
- .....a partner in surajmals. subsequent to the said inspection resulting in the discovery of the said anamath records from the residence of the assessee, there was an enquiry by the intelligence wing and the assessee was asked to produce the books relating to the said independent business. the assessee appeared once or twice, but he did not produce the account books relating to the said business. as a matter of fact, at every stage when he appeared before the authorities, he asked for time to produce the records. ultimately, the intelligence wing sent a report as to the discovery of the anamath books and the purport of their subsequent enquiry to the assessing authority on 6th february, 1965. 2. on receipt of that report, the assessing authority called upon the assessee to produce the.....
Judgment:

Ramanujam, J.

1. The assessee in this case is a partner in a firm called Surajmals. There was a surprise inspection of the business premises of Surajmals as well as the residence of the assessee on 4th September, 1964. During that inspection, certain slips, account books and other records had been recovered. The said records disclosed that the assessee must have had an independent business of his own, apart from his being a partner in Surajmals. Subsequent to the said inspection resulting in the discovery of the said anamath records from the residence of the assessee, there was an enquiry by the intelligence wing and the assessee was asked to produce the books relating to the said independent business. The assessee appeared once or twice, but he did not produce the account books relating to the said business. As a matter of fact, at every stage when he appeared before the authorities, he asked for time to produce the records. Ultimately, the intelligence wing sent a report as to the discovery of the anamath books and the purport of their subsequent enquiry to the assessing authority on 6th February, 1965.

2. On receipt of that report, the assessing authority called upon the assessee to produce the account books on or before 4th March, 1965, by issuing a notice dated 26th February, 1965. This notice, the assessee received, but he sent in a letter to the effect that as he was going to be out of the city for sometime, the enquiry may be posted to a date subsequent to 30th March, 1965. As soon as the assessee's reply dated 4th March, 1965, was received by the assessing officer, he promptly sent a letter on 5th March, 1965, refusing his request for adjournment and calling upon the assessee to produce the account books by 15th March, 1965. Unfortunately, this letter dated 5th March, 1965, could not be served on him in person, but it was only affixed on the door of his premises on 11th March, 1965. As the assessee did not produce the account books, nor did he present himself for the enquiry on 15th March, 1965, the assessing authority proceeded to issue a preassessment notice on 24th March, 1965. This preassessment notice also could not be served in person and was affixed. Later, the assessing authority sent a preassessment notice by registered post. But, this also returned unserved. It is, in these circumstances, the assessing authority passed the best of judgment assessment based on the entries found in the anamath records recovered from the assessee by an order of assessment dated 31st March, 1965.

3. The turnover assessed on the basis of the anamath accounts for the year 1959-60 was Rs. 5,84,824 out of which Rs. 3,12,522 relating to first sales of electrical goods were held liable to assessment at single point and the rest of the turnover at multi-point.

4. There was an appeal by the assessee to the Appellate Assistant Commissioner. But that appeal was dismissed on the ground that it was beyond time. There was a further appeal to the Appellate Tribunal. The Tribunal felt that the Appellate Assistant Commissioner was not justified in rejecting the appeal as being out of time. It, therefore, allowed the appeal and directed the Appellate Assistant Commissioner to entertain the appeal and dispose of the same on merits, after giving due opportunity to the assessee. According to the directions of the Tribunal, the Appellate Assistant Commissioner entertained the appeal and considered the same on merits. Before him, the assessee mainly relied on the fact that the assessment has been made without giving him reasonable opportunity, without questioning the assessment on merits. The Appellate Assistant Commissioner held that the assessee had been given reasonable opportunity by the assessing authority before making the assessment and, therefore, the assessment order cannot be set aside on that ground. On the merits, the appellate authority observed that either before the assessing authority or before him, the appellant had not chosen to prove his case that the anamath records cannot form the basis of the assessment.

5. The assessee went in appeal before the Tribunal. The Tribunal felt that the Appellate Assistant Commissioner could have given to the assessee a fresh opportunity to put forward his case on merits, without merely dismissing the appeal stating that the assessee had enough opportunity before the assessing authority. The Tribunal also felt that the assessee did not have sufficient and reasonable opportunity before the assessing authority, who made the best judgment assessment in the case. The Tribunal casually went into the merits of the case and expressed that the revenue did not establish the requisite nexus between the assessee and the transactions referred to in the records and that, therefore, the revenue has not established its case that the transactions referred to in the anamath records pertains to the dealings of the assessee. In that view, the Tribunal has set aside the entire assessment.

6. We are of the view that on the facts and circumstances of the case, the Tribunal is not justified in setting aside the assessment as such. We would have very much appreciated if the Tribunal itself had given an opportunity to the assessee to produce all the materials in his possession, if any, and to adduce any other evidence in support of his case that the anamath records cannot be taken to be the basis for the assessment. Even accepting the Tribunal's view that the assessee did not have reasonable opportunity before the assessing authority, its order setting aside the assessment without giving an opportunity to the assessing authority to make a fresh assessment, after giving an opportunity cannot be justified. When the statute imposes a liability on the transactions of sale effected by an assessee, the mere fact that the assessing authority did not give an opportunity to him to put forward his case will not enable the assessee to get away without being assessed under the Act. The only thing which he can claim is that he must have a reasonable opportunity before he is being subjected to an assessment. We are not able to appreciate the reasoning of the Tribunal that as the assessee did not have the reasonable opportunity before the assessing authority, the assessee could not be assessed at all. Even on the merits, the Tribunal's observation is very cursory, and it has not touched even the fringe of the question of assessability of the transactions found in the anamath records. Admittedly, the documents were recovered from the assessee's residence and it is for the assessee to explain how the records came to be found in his residence. If the records are connected with his activity, then he must explain the entries found in the said anamath records. He cannot merely keep away from the enquiry and ask the authorities to ignore the anamath records. Unless be explains the entries found in the anamath records which were taken from his residence, the assessing authority is entitled to proceed on the basis of the anamath records and make the best judgment assessment.

7. We are of the view that the Tribunal has not considered the merits of the case at any length. We cannot, therefore, accept the view taken by the Tribunal that the anamath records have not been shown to be connected with the assessee. The entire matter has to be considered afresh. We, therefore, set aside the order of the Tribunal as also the order of the Appellate Assistant Commissioner with a direction that the Appellate Assistant Commissioner will restore the appeal on his file and dispose of the same in accordance with law and after giving opportunity to the assessee to put forward his case and also to produce such of those materials which he may be inclined to file and also the oral evidence. The revision is allowed with costs. Counsel's fee Rs. 150.


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