Writ petitioner has come before this court challenging the order passed by the respondent wherein the respondent refused to verify the books of account of the petitioner as requested by the petitioner.
2. The facts of the case are as follows:
The petitioner is a dealer registered under Tamil Nadu General Sales Tax Act and he submitted the accounts for assessments for the year 1999-2000 and 2002 to 2003. The assessment were finalised. Subsequently under Section 16 of the TNGST Act, the assessment was made as per revised proceedings. Subsequently by Suo moto revision, a revised assessment was made on 28.11.2003 based on a third party statement. Challenging the same, the petitioner approached the Tamil Nadu Taxation Tribunal in O.P.No.116 to 120 of 2004 on the ground that the statement of third parties were not furnished and the petitioner was not given opportunity to cross-examine those witnesses. On that short point the Tamil Nadu Taxation Tribunal by an order dated 16.2.2004 was pleased to quash the revised assessment dated 28.11.2003 by giving following direction:.
"Therefore, considering the nature of the case and the submissions made before me, I set aside the impugned orders and direct the respondent to summon those persons, whom he feels to be third parties, for cross-examination by the petitioner and thereafter, allow sufficient time to file objection to the revision notices and pass orders in accordance with law. The cross-examination shall be completed within two months from the date of receipt of this order. The petitioner is also directed to co-operate with the respondent to complete the cross-examination within the time stipulated."
3. Subsequently the respondent issued notice dated 25.5.2004 wherein 18 persons were shown as witnesses to be produced for cross-examination and sixteen witnesses were produced for cross-examination and cross-examination was also done by the petitioner. By a letter dated 15.6.2004 the petitioner sought for an opportunity to produce the books of accounts before making the assessment and expressed their willingness to produce records for verification. However by the impugned order dated 16.6.2004, the respondent rejected the petitioner's claim stating that the tribunal set aside the assessment and directed the assessing officer to complete the cross-examination within two months. There was no direction or order for check of accounts as requested by the petitioner. Hence the said order is impugned before this court.
4. Mr.N.Prasad, learned counsel for the petitioner submitted that once assessment order is set aside and opportunity was given to the petitioner to cross-examine the witnesses whose statements were relied upon for the purpose of making revised assessment, the respondent is duty bound to check the accounts once again and make an order conjointly with the statement of the third parties. In nutshell he submitted that the assessment could be made only after appreciation of evidences in toto and the statement alone cannot be the criteria to make a revised assessment order. He also referred Rule 10 and Rule 11 of Tamil Nadu General Sales Tax Rules 1959 which speaks about the best judgement of the authority namely the assessment officer before passing the assessment order. He relied upon a judgement of a Division Bench of this court in K.Ramalingam and Co. versus State and another reported in 1992 STC 275, wherein it has been stated as to how the best judgement assessment could be made, which reads as follows:
"On a plain reading, this sub-section provides for best judgement assessment in the following cases: (a) failure to submit return within the prescribed period or (b) where the return submitted is incomplete or incorrect. In either case, the assessing authority can assume jurisdiction under Section 12(2) of the Act to proceed to assess to the best of his judgement only after making such enquiry as is considered necessary but before making the best of judgement assessment, the assessee has to be given a reasonable opportunity to prove the correctness of completeness of the return in cases where the return is found incorrect or incomplete. Where return is rejected without recording a finding that it is either incomplete or incorrect and without rejecting the accounts furnished by the assssee, it is not permissible, for the assessing authority to take recourse to the provisions of section 12(2) of the Act. A best judgement assessment is not a random or uncontrolled assessment so as to give a go bye to the relevant circumstances and the material which may be relevant to the assessment of an assessee. The mere fact that the assessee failed to maintain stock register by itself is not normally a sufficient ground for rejecting the return. So also, the declaration of low gross profit or trade loss is not a sufficient reason to infer suppression, particularly where no finding of inflated purhase or suppressed sale has been made. The quantity of the material purchased and utilised was capable of verification and should have been so verified. The assessing authority did not record any finding to the effect that the assessee had made any wrong classification of the taxable sales under the exemption sales. There is nothing on record to show that the transactions of sale were not vouched for. In the assessment year, no purchase omission has at all been pointed out. As a matter of fact, no finding has been recorded by the assessing authority to the effect that the return filed by the assessee is either incomplete or incorrect. Without rejecting the accounts and he return the assessing authority cannot take recourse to best of judgement assessment. It depends upon the facts and circumstances of each case as to whether the mere the mere non-maintenance of the account books can lead to any inference that the return is incomplete or incorrect and that question has to be considered in every case where this point arises and the assessing authority has to come to a conclusion, after taking all these factors into consideration, that the return is incomplete and the accounts incorrect where accounts are submitted."
5. Mr.J.Ganesan, learned Government Advocate(Tax) submitted that the Tribunal remanded the matter only to give opportunity to the petitioner to cross-examine and not more than that and therefore there was no positive direction by the Tribunal to check of accounts and in view of that he submitted that the authority, strictly went by order of the Tribunal and the same cannot be found fault with.
6. A perusal of the order passed by the Tribunal would reveal that the matter was remanded only for the purpose of cross-examination alone, whereas, the entire assessment order was set aside. It means that the assessing authority has to make a fresh assessment by taking into consideration not only the evidence of witnesses but also the books of accounts. For making any assessment, books of account are necessary and the evidence of witnesses cannot be taken into consideration in isolation by the authorities without considering or taking up the books of accounts. It should be comprehensive exercise by the authority to make an assessment. As stated in the Division Bench judgement, for the best judgement assessment could be only by taking into account the books of accounts and evidence of witnesses in toto.
7. Therefore, the order passed by the authority is quashed and the respondent is directed to check the books of accounts, which should be produced by the petitioner within two weeks from the date of the receipt of a copy of the order. On such production, the authority would take steps to make assessment considering all the documents as required under law. If the authority produced any witness for cross examination, and the same has to be done within two weeks and thereafter the authorities are directed to make assessment. If the authority does not offer any further witness for cross-examination, the petitioner is directed to produce all the books of accounts as stated above within two weeks from the date of the receipt of the copy of the order. Accordingly the writ petition is allowed and there will be no order as to costs. Consequently the connected WPMP.No.480 of 2009 is closed.
vk To The Commercial Tax Officer(Addl.) Vepery Assessment Circle, No.5, Ritherdon Avenue, Chennai 600 007