JUDGMENT
H.L. Agrawal, C.J.
1. In this reference under Section 24(1) of the Orissa Sales Tax Act, 1947 (for short, “the Act”) by the Member, Additional Sales Tax Tribunal, Orissa, the following question of law has been referred to this Court for its opinion :
Whether, on the facts and in the circumstances of the case, the learned Member, Additional Sales Tax Tribunal, Orissa, was correct in interfering with the best judgment assessment of the Sales Tax Officer concerned and reducing the enhanced determined gross turnover returned resulting in reduction in the extra tax demand against the assessee ?
2. The facts of the case, briefly stated, are as follows :
For the assessment year 1976-77, the dealer returned a gross turnover of Rs. 3,10,398.25 who carried on business in motor parts. The Sales Tax Officer did not accept it, inter alia, on the ground that serial No. 747 was removed from the cash memo book and no purchase voucher was produced at the check gate on 27th July, 1976. He also noticed certain suppressions of sale of different items. He accordingly proceeded to assess under Section 12(4) of the Act and made a best judgment assessment by enhancing the gross turnover to Rs. 3,87,991.94.
3. The dealer filed an appeal and the appellate authority allowed the appeal in part reducing the gross turnover to Rs. 3,49,193.25. The dealer then filed second appeal before the Tribunal, and the Tribunal accepted the explanation of the dealer regarding the absence of serial No. 747 from the cash memo book which was due to the mistake of the press. But it did not accept the explanation for other omissions and irregularities found by the subordinate authorities. But on computation, the value of the items of suppression of sale on only one day of Rs. 341 was detected in course of the inspection on 21st April, 1976, i.e., the Tribunal enhanced the gross turnover by Rs. 6,138 only reflecting the suppression only in the first quarter and directed computation of tax accordingly, thus giving some reliefs to the dealer.
4. The Revenue then filed the application for reference before the Tribunal on the ground that once the Tribunal had accepted the charge of sale suppression, the order determining the enhancement of the gross turnover only in one quarter of the assessment year in question was wrong. Referring to the decision of the Supreme Court in the case of the Commissioner of Saks Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77, the reference has been made by the Tribunal.
5. Learned Standing Counsel (C.T.) on the basis of Esufali’s case [1973] 32 STC 77 (SC) submitted that the Tribunal has committed an apparent error of law in enhancing the gross turnover by Rs. 6,138 only with reference to one quarter only and that the entire year should have been taken into consideration. In Esufali’s case [1973] 32 STC 77 (SC), the question was whether best judgment assessment could be made on the basis of suppression of sale for 19 days and whether that could form the basis for estimating the escaped turnover for the whole year. There, the Sales Tax Officer had reassessed the assessee under the provisions of the Madhya Pradesh General Sales Tax Act on the basis of “best judgment” by estimating his turnover on the basis that dealer had dealings outside his accounts of a particular value during the period of 19 days. No doubt, the Sales Tax Officer in that case estimated the assessee’s turnover for the entire assessment period in question, an act which was challenged, and the dealer had challenged the estimate when it was observed that:
…So long as the estimate made by him is not arbitrary and has nexus with facts discovered, the same cannot be questioned. In the very nature of things the estimate made may be an over-estimate or an under-estimate. But that is no ground for interfering with his ‘best judgment’…. The assessee cannot be permitted to take advantage of his own illegal acts…. In the case of ‘best judgment’ assessments, the courts will have to first see whether the accounts maintained by the assessee were rightly rejected as unreliable. If they come to the conclusion that they were rightly rejected, the next question that arises for consideration is whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed….
The principles decided in Raghubar Mandal Harihar Mandal v. State of Bihar [1957] 8 STC 770 (SC) were quoted with approval.
The above proposition as such being well-settled cannot be disputed. But Esufali’s case [1973] 32 STC 77 (SC) cannot be held to be an authority for a proposition that if an assessing officer applies the material with respect to only a part of the assessment year, then the court will direct him to make an estimate for the whole year, as in that case it would amount to giving a direction as to how to work out his own discretion in a best judgment assessment. After all, it is only a matter of applying his own judgment to the best of his discretion “which may be an over-estimate or an under-estimate”. It cannot be said to be either arbitrary or devoid of any nexus. The jurisdiction being of an appellate authority and of the High Court, under a reference quite different, the High Court will not interfere in such circumstances. The Tribunal found it reasonable to enhance the gross turnover only by a particular sum which appeared best in its judgment. The Tribunal as a final court of fact had full authority in law to intervene and make its own assessment of the facts in exercise of its best judgment in the matter. Particularly when a further explanation offered by the dealer had been accepted, the Tribunal might have thought it fit to reduce the quantum and thus thought a particular way to reduce the enhancement of the gross turnover.
6. Learned counsel for the-dealer referred to us a decision of the Kerala High Court in the case of P.C. Ittymathew Son v. State of Kerala [1976] 37 STC 184, where in the view of the Appellate Assistant Commissioner, the suppression actually detected could be considered only to cover six months for the reason that the inspection has made in the middle of the year. There is a long discussion on this aspect of the matter to indicate that an inspection on one occasion in course of a particular assessment year may not justify an enhancement for the entire period and the interference by the Tribunal in the absence of any further material, such as, further inspection during any other period, the High Court set aside the order of the Tribunal on the ground that it had no sufficient material whatsoever “to extend same pattern to cover also six months”. The above principle appears to me quite forceful and meaningful and fully supports the view taken by the learned Member.
7. I therefore hold that it is open to the assessing authority while exercising “best judgment” power of assessment to confine the additions with reference to a particular period only taking into consideration the nexus between the materials available on the record, depending upon the facts and circumstances of each case, when there is no legal compulsion that it must be for the entire assessment year.
8. I would therefore hold that no error of law has been committed in the order passed by the Tribunal. Accordingly, the answer to the question must be given in favour of the dealer and against the Revenue. In the circumstances of the case, I would, however, make no order as to costs.
S.C. Mohapatra, J.
I agree.