T.B. Ch. V. Ramanaiah and Sons vs Commissioner of Commercial Taxes, Hyderabad

M.N. Rao, J.—This appeal, u/s 23 of the Andhra Pradesh General Sales Tax Act, 1957 (for short "the Act"), is directed against an order passed by the Commissioner of Commercial Taxes dated January 7, 1986, in exercise of his revisional jurisdiction u/s 20(1) of the Act setting aside the order of the appellate authority - the Deputy Commissioner of Commercial Taxes - dated October 13, 1981, in Appeal No. 90/81-82 in respect of turnover of Rs. 1,64,790. The appellant - M/s. T. B. Ch. V. Ramanaiah & Sons of Kothavalasa - is a registered dealer under the Act carrying on business in groundnut oil, groundnut cake, gingelly oil and gingelly cake. The premises of the appellant was inspected on May 1, 1979 by the Commercial Tax Officer and the inspection disclosed that there was an excess of 38 bags of groundnut cake and 18 bags of gingelly cake. The Commercial Tax Officer estimated the suppressed turnover relatable to the groundnut oil and gingelly oil at Rs. 54,930 and levied tax of Rs. 1,950. He also levied compounding fee of Rs. 1,000 complying with the request of the appellant. At the time of the final assessment, the Commercial Tax Officer-II, Visakhapatnam, in his assessment order dated December 24, 1980, added the turnover of Rs. 54,930 as well as Rs. 1,09,860 representing probable suppressions and subjected the entire turnover of tax. While working out the tax payable, the assessing authority had deducted Rs. 1,950, which was collected earlier at the time of the inspection.

On an appeal preferred by the assessee, the Appellate Deputy Commissioner, Commercial Taxes, allowed the same taking the view that as tax was already levied and collected on the turnover of Rs. 54,930, the same could not be added once again to the taxable turnover, and with regard to Rs. 1,09,860 representing the probable suppressions, there was no basis for subjecting the same to tax "as no irregularities were noticed in the subsequent inspections made during the assessment year". On that view, the appellate authority set aside the addition of Rs. 1,64,790 made towards the suppression and probable suppression and allowed the appeal. That order was revised by the Commissioner of Commercial Taxes by the impugned order on two grounds; (i) Merely because the transactions have been accounted for after the inspection, the assessing authority was not precluded from making as assessment to the best of his judgment; and (ii) absence of subsequent detection with regard to any suppressed turnovers does not preclude the assessing authority from making best judgment assessment by "using material found at the time of the first inspection". He, therefore, set aside the appellate order and restored the assessment order. Aggrieved by that, the present appeal was brought.

The assessment year, in question, is 1979-80. Inspection was made by the Commercial Tax Officer on May 1, 1979, by which time 30 days of the assessment year were over. With reference to the inspection of accounts, what was discovered was 38 bags of groundnut cake and 18 bags of gingelly cake in excess of what ought to have been reflected in the books. The estimated suppressed turnover was Rs. 54,930 which amount represents the suppressions discovered till the date of the inspection. There cannot be any objection to subject this turnover of Rs. 54,930 to tax. For the subsequent period, no irregularities were found when inspections were made. The appellate authority had recorded its finding categorically that inspections were conducted during the assessment year but no irregularities were found. It is, therefore, not open to the Commercial Tax Officer to add Rs. 1,09,860 as probable suppressions for the period subsequent to May 1, 1979. As already noticed, the probable suppressions with reference to the inspection of the account books and the stocks came to only Rs. 54,930. We, therefore, in this fact situation, uphold the addition of Rs. 54,930 but delete the addition of Rs. 1,09,860. The assessment order shall stand modified accordingly.

In the result, the appeal is allowed in part. No costs.

Appeal partly allowed.