State of Karnataka vs M/s. Vishu Saw Mill and Timber Merchant, Nipani, Belgaum District

S. Rajendra Babu, J.-The Assessing Authority made an assessment for the assessment period 1-4-1989 to 31-3-1990 on the basis of information received by it from the Commercial Tax Officer (Int.) North Zone, Belgaum. An inspection was made on 22-5-1989 and it was found that the assessee had not accounted for timber worth Rs. 1,00,000/-. On 22-9-1989 another inspection was made and it was found that he had not accounted the cut size timber to the extent of Rs. 1,21,205/- for the period between 29-5-1989 and 17-9-1989. Thereafter, proposition notices were issued to the assessee by the Assessing Authority calling for objections as to why he should not be made liable for determining the total and taxable turnover at Rs. 28,12,455-30 and Rs. 15,70,832-40 respectively. Objections were raised by the assessee in regard to the suppression of Rs. 1,00,000/- as found by the Commercial Tax Officer (Int.), Belgaum by contending that the timber logs which were brought to tax belong to farmers and they were actually brought by the farmers for cutting purposes and he did not have any title over the goods and the same should not be taken note of for the purpose of taxation. This objection was overruled by the Assessing Officer having found that he had not maintained any register for having received the goods at the instance of any customers. No material was forthcoming to show that the timber pertains to farmers. In the absence of any such material, he found that the stand taken by the assessee was false. As regards the unaccounting of the cut size timber, he made an estimation at five times on the turnover of Rs. 1,21,305/- based on the report of the Commercial Tax Officer (Int.) who had proposed to estimate five times on the turnover of Rs. 1,21,305/- but subsequently reduced the same to three times and on that basis concluded the assessment. Being aggrieved by that order, the matter was carried in appeal.

The Appellate Authority examined the matter in detail and while affirming the view taken by the Assessing Authority gave such benefits such as that the estimation made at three times was reduced to two times on the amount of Rs. 1,21,305/- because such sales were out of tax suffered timber logs as noticed by the inspecting authorities as well as the Assessing Authority and gave deductions wherever falls. When the matter was carried further in appeal to the Tribunal, the Tribunal did not advert to the questions in issue and proceeded to hold that the authorities had not considered the stand taken by the assessee that he received the timber for cutting them to planks while in fact, the Assessing Authority had considered the same. Obviously they had not noticed this part of the order of the Assessing Authority. Therefore, the conclusion based on the wrong premise is plainly erroneous. The finding recorded by the Tribunal in that regard has got to be set aside and the order of the First Appellate Authority will have to be restored. Similarly as regards the cut size timber sale amounting to Rs. 1,21,305/- the Tribunal did not apply its mind to the facts and simply concluded that as the same was from tax suffered timber, there may not be any suppression of turnover. On the other hand, there may be suppression of turnover. There is hardly any discussion in this regard.

The finding recorded by the Tribunal is set aside and the order made by the First Appellate Authority stands restored.

This petition is allowed accordingly.