P. Shankerlal vs Joint Commercial Tax Officer Sowcarpet II Division and Another

Ramaprasada Rao, J.—The petitioner was carrying on business without registering himself as a dealer with the Commercial Taxes

Department. Apparently, he was carrying on business during the assessment years 1963-64 and 1964-65. On 31st July, 1964, his premises was

raided by the officials of the Commercial Taxes Department and certain incriminating materials, to wit, three slips were discovered in the course of

such search. On 10th August, 1964, a provisional assessment notice was sent to the petitioner wherein a proposal was made to assess him in the

best judgment method since the slips which were discovered in the course of the search were the sole material on which the department could act

and that it was felt that there was a possible escapement of the assessable turnover and hence the tax. The petitioner replied on 25th August, 1964,

stating that his account books were maintained in the regular course of business and reflected all his dealings and that he had nothing to do with the

slips. The revenue however proceeded with the notice of provisional assessment and ultimately he was assessed for the years 1963-64 and 1964-

In particular, for the year 1964-65 the provisional order of assessment was made on 26th August, 1964, which was confirmed on 28th

February, 1966. We are not here concerned with the assessment year 1963-64. It is as against the order dated 28th February, 1966, that the

present writ petition has been filed.

Learned counsel for the petitioner submits that the petitioner abandoned his business on 31st July, 1964, and as the slips did not have any date

or signature, no reliance could be placed on them for the purpose of fixing the responsibility for such slips on the petitioner or to refer to them as

being connected with his business. In so far as the second contention is concerned, the taxing authority has come to the factual conclusion that the

slips do have a bearing on the petitioner''s business, and I am not inclined at this stage to interfere with such a factual finding. But the case of the

petitioner is that he abandoned his business on 31st July, 1964, and therefore the ultimate order of assessment made by the assessing authority

whereby he assessed the turnover on the best judgment basis at Rs. 1,25,934 is illegal. Of course, the petitioner is also aggrieved with the order of

penalty which is indeed consequential. His case is that when the business has been abandoned on 31st July, 1964, the assessing authority could not

have reasonably come to the conclusion that the business might have been closed four months beyond 31st July, 1964. He would say that as there

is no independent material which was communicated to him and which he could refute, the taxing authorities cannot suo motu rely upon information

gathered by them and assess a dealer capriciously. But in the reply he gave on 25th August, 1964, the contention of the petitioner was one which

ought to be normally accepted. In his reply dated 25th August, 1964, the petitioner while questioning the authority of the taxing authority to apply

the best judgment method, has taken meticulous care to object to the very process of assessment. There is, however, no whisper in that letter that

as and from 31st July, 1964, he discontinued the business, and that he was stating his objections to the proposal because he was called upon to do

so. This circumstance is a tilting one and the present excuse put forward against the concluded assessment that he abandoned the business on 31st

July, 1964, and therefore there could be no assessment beyond 31st July, 1964, even on the best judgment method appears to be unacceptable.

The petitioner-assessee also has got a duty to perform. In this case, the petitioner was doing business during the previous assessment year 1963-

He should be aware of the provisions of the Tamil Nadu General Sales Tax Act, 1959, and the rules made thereunder, and in particular Rule

15(3), whereunder it is obligatory on the part of every dealer who discontinues his business during the course of a year for which he has been

provisionally assessed under Rule 10 or Rule 11, to submit to the assessing authority concerned, a return in the prescribed form for the period up

to and inclusive of the date of discontinuance of the business and that ought to be done within thirty days of such discontinuance. It is not in dispute

that no such return has been filed. Even in his letter dated 25th August, 1964, he has not suggested that he had closed down his business and that

he was submitting the return in the prescribed manner up to the date of discontinuance. In these state of affairs, I am unable to agree with the

petitioner that his case that he abandoned the business on 31st July, 1964, which is the date when his premises was searched is an acceptable one,

as it is against the materials on record.

With regard to the next contention about the absence of dates and signature in the slips, I have already expressed the view that it is for the

assessing authorities to decide whether such materials could be linked with the petitioner. This they have done. If the petitioner was really aggrieved

against the finding of the assessing authority, he should have canvassed the propriety of such a conclusion before the appellate authority under the

Act. This has not been done. For the reason that the petitioner did not avail himself of the other remedies under the Act and also because the

theory of closure of business is not acceptable, I am not able to sustain the rule nisi and it is discharged. The writ petition is accordingly dismissed.

There will be no order as to costs.