ORDER
R.P. Sethi, C.J.
1. Finding that the petitioner has been guilty of suppression and after forming an opinion that the return of turnover filed by the petitioner in form No. 4 of the year ending March 31, 1988 was incorrect and incomplete, the assessing authority issued a proposition notice to the petitioner in terms of Sections 12(3), 12(4) and 12-B(2) of the Karnataka Sales Tax Act, 1957 (hereinafter called 'the Act'), calling upon the petitioner to show cause against the proposed best judgment assessment. Petitioner was further called upon to adduce evidence if any, failing which it was to be presumed that the assessee had no objection to the proposed assessment. After considering the reply furnished and after affording the petitioner an opportunity of being heard, the assessing authority vide his assessment order dated March 31, 1990 (annexure-C) ordered that the petitioner-assessee shall be assessed to a tax of Rs. 1,10,87,708 for the period from April 1, 1987 to March 31, 1988 under Section 12(3) of the Act and further directed them to pay the penalty of Rs. 88,58,000 which is about equal to taxes evaded. Not satisfied with the assessment made, the petitioner herein preferred an appeal before the Deputy Commissioner of Commercial Taxes, who vide his order dated March 25, 1991 (annexure-D) set aside the assessment order and also the penalties imposed upon the petitioner and remitted the case to the assessing authority for redoing the same in the light of the findings and discussions made in his order. Not even satisfied with the order of the appellate authority, the petitioner herein preferred a further appeal before the Karnataka Sales Tax Appellate Tribunal. The State also submitted their cross-objections. The Tribunal disposed of the appeal and the cross-objections vide a detailed order dated May 20, 1992 (annexure-F). The appeal was partly allowed. The cross-objections of the State were also allowed. The order of the appellate authority remanding the case to the assessing authority was set aside. The assessment order with modifications to the turnover was restored. Penalty under Section 12(4) of the Act passed by the assessing authority was upheld with modification to the penalty amount. On a critical examination of the facts of the case, the Tribunal came to the conclusion that the tax suppressed in the case worked out to be Rs. 11,44,983 on rectified spirit and Rs. 3,43,823 on molasses, both totalling to Rs. 14,88,806. Considering the fact that the assessing authority had imposed a penalty of one and half times which was maximum, the Tribunal came to the conclusion that penalty to the extent of suppressed tax, that is, Rs. 14,88,806 should be imposed upon the petitioner under Section 12(4) of the Act.
2. Still feeling aggrieved with the orders of the Tribunal, the petitioner-assessee has filed this revision petition under Section 23 of the Act for adjudication of the following questions of law by this Court:
(a) Whether, on the facts and circumstances of the case, the Tribunal is right in law in holding that while passing the assessment order, the assessing authority had provided the entire extract of seized material and afforded opportunity to the petitioner before completion of assessment ?
(b) Whether, on the facts and circumstances of the case, the Tribunal is right in law in holding that exhibit III(b) constitutes a reliable material of adequate evidentiary value so as to constitute a basis for the purposes of determination of turnovers and tax liability thereto ?
(c) Whether, on the facts and circumstances of the case, the Tribunal is correct in law in holding that the first appellate authority was not correct in law in setting aside the additions and the levy of penalty ?
(d) Whether, the Tribunal is right in law in holding that the analysis of exhibit III(b) reveals suppression of production for the month of March, 1988 at Rs. 2,50,138.50 litres and whether the Tribunal is correct in law in determining the turnover on the basis of exhibit III(b) for the entire year ?
(e) Whether, the total turnover as determined by the Tribunal is in accordance with law and based upon valid material ?
(f) Whether, on the facts, the Tribunal is correct in law in confirming the tax levied under Section 6 of the Act ?
(g) Whether, the Tribunal is correct in law in holding that the penalty under Section 12(4) of the Act is leviable and whether the penalty so levied is justified ?
(h) Whether, the appellate order passed by the Tribunal is valid and sustainable in law ?
3. The impugned appellate order is stated to be contrary to the facts of the case and well-settled principles of law, It is submitted by the learned counsel for the petitioner that the Tribunal committed an error of law in passing the impugned appellate order by wrongly holding that while passing the assessment order, the assessing authority had supplied the entire extract of seized exhibits to the petitioner despite the fact that the assessing authority had failed to provide the entire extract of all the seized exhibits. The assessing authority was not justified to take into consideration several materials which were allegedly not made available to the petitioner before passing the order. It is contended that the Tribunal was not justified in holding that exhibit III(b) constituted a material of absolute evidential value so as to be relied upon for the purposes of assessment and to quantify the turnovers on the basis of the said exhibit. Even according to exhibit III(b), it was not established that the petitioner had been guilty of suppression of the rectified spirit for the month of March, 1988. It is contended that the factory was found to have been remained closed on four days in the month of March, 1988 and that the Tribunal was not justified in returning a finding to the contrary. It is contended that the Tribunal was not justified in holding that the assessing authority was correct in comparing exhibit III(b) with exhibit I. The determination of turnover is alleged to be based upon erroneous considerations. The Tribunal was not justified in confirming the levy of penalty under Section 12(4) of the Act. The Tribunal ought to have held that the addition as made by the assessing authority and levy of penalty thereto was totally untenable and unsupportable in law.
4. A perusal of the alleged questions of law raised for adjudication by this Court, would indicate that none of the aforesaid questions is in fact a question of law. Such questions are in effect and in essense, questions of fact which have rightly been considered, examined and analysed by the assessing authority, the appellate authority and the Tribunal. Only the conclusions arrived at on the basis of the facts of the case are in dispute. There has not been any serious dispute regarding the suppression of facts by the petitioner. It has not been disputed either before the authorities under the Act or before the Tribunal that exhibit III(b) is a document pertaining to the petitioner which if analysed, clearly indicates the suppression of the actual production of the rectified spirit, manufactured by the petitioner during the month of March, 1988. The learned counsel for the petitioner in support of his contentions has urged that the conclusions arrived at by the assessing authority and the Tribunal were not correct and has also taken pains to take us through the whole of the document exhibit III(b). He has contended that as the factory was proved to have been closed on 18th, 19th, 20th and 21st of March, 1988, the assessing authority and the Tribunal were not justified in coming to the conclusions regarding the production and manufacture of spirit to the extent as has been pointed out by them vide their orders impugned in this petition.
5. The learned counsel appearing for respondent has also referred to the aforesaid documents and submitted that both the assessing authority and the Appellate Tribunal were justified in making exhibit III(b) as the basis for passing an order of best judgment against the petitioner. The learned Government Pleader has submitted that the assessing authority and the Tribunal have rightly come to the conclusion that the production of spirit had not been stopped for the aforesaid four days, but the factory had stopped the manufacture for only about 12 hours during the aforesaid period of four days.
6. After referring to the order of assessment, the order of the appellate authority, documents produced in the case, and after critical analysis, the Tribunal formulated the following questions for their determination :
'(a) Whether the inspection dated July 12, 1989 is relevant for purposes of assessment year under appeal and whether exhibit III(b) is relevant document to be considered for assessment purposes ;
(b) Whether the best judgment assessment concluded by the assessing authority is justified ;
(c) Whether the first appellate authority is justified in passing the order as he did remanding the case to assessing authority to redo the assessment by adopting recovery at 225-230 litres/M.T. of molasses ;
(d) Whether the turnovers as determined by the assessing authority are correct and reasonable ; and
(e) Whether penalty under Section 12(4) of the Act is justified or otherwise ?
7. We have also perused the records and find that inspection in the premises of the petitioner was conducted on June 6, 1989 and July 12, 1989. During the course of inspection, several books of accounts and documents including exhibit I and exhibit III(b) were seized. The documents contained the details of production activity of the petitioner on a day-to-day basis commencing from March 2, 1988 to July 11, 1989. The documents also contained entries relating to molasses used, rectified spirit produced and also the date of recovery at page 3 of exhibit III(b). There existed entries of opening balance of wash, wash made, wash distilled used, sludge obtained and closing balance for the months November, 1986 to June, 1989. The entries pertaining to the production for the month of March, 1988 were compared with the entries as per exhibit I which was a book of accounts maintained as prescribed by the excise authorities. It was found that exhibit III(b) contained entries, some of which were found to be existing in regular books of accounts and others not entered in regular books of accounts. The Tribunal therefore, rightly came to the following conclusion :
'We are fully convinced that this exhibit relates to the business transactions of the appellant only and contain day-to-day details of consumption of wash and molasses and production of rectified spirit and relevant for assessment year in that it contains production details of March, 1988. Therefore, we are inclined to agree with the assessing authority that this exhibit III(b) which is maintained in the usual course of business reflecting true state of affairs is a relevant exhibit for purposes of assessment. The findings of the appellate authority, agreeing with the appellant that exhibit III(b) is a rough calculation book maintained by the Chemical Engineer of the firm for monitoring the working of the plant and has nothing to do with the appellant's business activities is not a rational and reasonable conclusion and has to be set aside.
Looking to the production details of rectified spirit with reference to the molasses consumed as computed on the basis of exhibit III(b) in table 7 by the assessing authority at page 74 of the assessment order, the production of rectified spirit for March, 1988 is taken at 9,87,363.300 litres. However, the production of rectified spirit for March, 1988 as declared by the appellant to the Government is at 6,91,726.400 litres. The difference between the two, viz., 2,95,636.900 litres is considered as suppressed rectified spirit production has not been reconciled and satisfactorily explained by the appellant, except stating that the production details as per exhibit III(b) did not reflect the correct state of affairs since exhibit III(b) itself was not a regular account book, but a rough book maintained by the Chemical Engineer of the firm for his own personal consumption. We have already stated that the contention of the appellant that exhibit III(b) is not a relevant document, is not acceptable to us. There is substantial difference between the production of rectified spirit as per exhibit III(b) for the month of March, 1988 and as declared by the appellant for March, 1988, the difference being 2,95,636.900 litres. Since this much of production of rectified spirit has not been accounted for by the appellant for assessment, the corresponding sales turnover of rectified spirit must also have been suppressed for assessment purposes. Further, this much quantity of rectified spirit which has been suppressed from regular books of accounts must have been obtained from undisclosed purchases of molasses and therefore will attract tax under Section 6 of the Act. In these circumstances, we are convinced that the assessing authority was fully justified in rejecting the declared turnovers as not true and correct and in proceeding to conclude assessment to the best judgment. The action of the assessing authority in this regard is fully justified.'
8. On the basis of this finding, the Tribunal rightly concluded that the appellate authority had passed an order which was contrary to the record seized at the time of inspection. The appellate authority was held to have wrongly concluded that document exhibit III(b) was not relevant document for the purpose of assessment. The Tribunal did not approve the casting of uncharitable remarks about the assessing authority for basing the assessment on the aforesaid exhibit. The Tribunal held on facts that the appellate authority was not justified in setting aside the assessment order as arbitrary and without basis and remanding the assessment with directions to adopt yield between 225 and 230 as against the average yield of 250 obtained as per exhibit III(b), the remand order was held not to be justified. The Tribunal, thereafter made independent verification of entries as per exhibit III(b) and came to the conclusion that except for the totalling error and for the error on March 16, 1988, there was no other errors or inconsistencies. The production of rectified spirit on March 12, 1988 as per exhibit III(b) was held to be 38,069.7 litres. On facts it was held that the date March 14, 1988 in exhibit III(b) related to the date March 15, 1988 since production shown on March 13, 1988 was at 69,703.6 could not be one day's production but related to the production on 13th and 14th March, 1988. In regard to 18th, 19th, 20th and 21st March, 1988, exhibit III(b) was proved to have shown that the distillery had stopped production only for about 12 hours. The assessing authority on the basis of dip measurements and average recovery rate at 9.5 had therefore, rightly arrived at production of rectified spirit for the aforesaid dates at 1,00,076 which figure agrees with the average recovery rate of about 250 in terms of exhibit III(b) and table 9 of the assessment order. The estimation of the quantity of molasses used by the appellant was justified. The learned counsel appearing for the petitioner was not in a position to persuade us to come to a different conclusion. It was not correct that the principles of natural justice had not been complied with because it is very clear from the record that the assessing authority had supplied copies of the exhibits to the learned counsel for petitioner who had acknowledged for having received the same.
9. The learned counsel appearing for the petitioner submitted that the Appellate Tribunal had not rightly concluded regarding the production with the result that the estimation made was excessive. The Tribunal dealt with this argument of the learned counsel also and rightly concluded as follows :
'The plant capacity is to be understood as the capacity of plant for production of rectified spirit. If the plant is able to use molasses distilled to the extent of 10,34,33,376 litres for the year as a whole, and when it is able to bring out rectified spirit at the recovery rate of 12.25 which means 84,43,540 litres of rectified spirit, this has to be understood as plant capacity. This only shows the extent to which the appellant has worked the plant during the assessment year. The capacity as certified by Government of India is for normal 310 working days for normal working hours. The results as per exhibit III(b) shows that the appellant has utilised the plant capacity to the maximum possible extent and has been able to produce 84,43,540 litres of rectified spirit. Otherwise, there is no satisfactory answer forthcoming from the appellant as to how he could achieve this much of production.
10. However, keeping in view the facts and circumstances of the case, the documents seized in the matter, the submissions made on behalf of the petitioner, the Tribunal came to the conclusion that the turnovers determined by the assessing authority required modification, for which the Tribunal detailed its reasons in the order, the subject-matter of the present revision petition. On the basis of the records, the Tribunal concluded that the actual suppression of rectified spirit for March, 1988 was 9,41,864.9-6,91,726.400 comes to 2,50,138.50. The assessing authority had quantified the suppression figures for the months commencing from April, 1987 to February, 1988 on the basis of figures in exhibit III(b) for the period of 16 months and 11 days which means the production at 33 lakhs litres. The Tribunal rightly observed as under :
'We are of the view that each assessment year is a different entity for tax purposes and there is no justification for the assessing authority to traverse beyond the assessment year in order to work out the suppression of rectified spirit for the assessment year under appeal, more so when exhibit III(b) itself gives the complete particulars about the quantity of wash distilled used for all the 12 months of the assessment year. Once the rectified spirit production for March, 1988 as per exhibit III(b) is available as also the total quantity of wash distilled used for March, 1988 which is at 1,15,42,682 litres as per exhibit III(b), it is quite easy to work out the rate of recovery of rectified spirit per molasses distilled used. Thus, the molasses distilled used divided by rectified spirit production for March, 1988, i.e., 1,15,42,682 divided by 9,41,864.9 = 12.25 will be the rate of recovery of rectified spirit. It means that 12.25 litres of wash distilled used gives one litre of rectified spirit. On this basis, it is possible to work out the total production of rectified spirit for the entire year applying this rate. As per exhibit III(b) for the assessment year under appeal the quantity of wash distilled used in the manufacture of rectified spirit is at 10,34,33,374 litres. This divided by 12.25 will give us the production of rectified spirit for the assessment year at 84,43,540 litres. As against this, the assessing authority has adopted rectified spirit production during the assessment year at 98,37,287 litres which in our view is excessive. Further, this figure does not reconcile with the quantity of wash distilled used in the manufacture of rectified spirit and recovery rate at 12.25 as per exhibit III(b). Therefore the turnover as estimated by assessing authority on the basis of exhibit III(b) for the subsequent assessment year does not give the correct result. It should be 84,43,540 litres.'
11. In regard to the rate, the Tribunal took a lenient view and held that the same, be assessed at Rs. 4 per litre instead of Rs. 14 per litre as was assessed by the assessing authority. Regarding utilisation of molasses, the Tribunal came to the conclusion that appellant should be proved to have utilised the same to the extent of 33,374.160 M.Ts., whereas the appellant had declared to have used only 29,476.369 M.Ts. of molasses which meant that molasses to the extent of 4,297.791 M.Ts. must have been purchased and utilised in manufacturing the rectified spirit but not accounted for in the regular books of accounts. The manufacture of rectified spirit which is liable to tax under Section 6 of the Act was rightly worked out to be at Rs. 8,59,550.
12. Learned counsel for the appellant thereafter submitted that the Tribunal was not justified in imposing the penalty in terms of Section 12(4) of the Act in as much as the petitioner was not found to have suppressed the material facts. It is further submitted that the basis adopted by the assessing authority was not relevant to the estimate made. It cannot however be denied that the present case was a case of best judgment assessment and the assessee could not be permitted to take advantage of his own wrongs. It was for the authorities under the Act to take appropriate action for the enforcement of the relevant provisions of law and take appropriate action on that behalf. The Supreme Court in the case of Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulali reported in [1973] 32 STC 77 has held as follows :
'The task of the assessing authority in finding out the escaped turnover was by no means easy. In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the 'best judgment' assessment, no doubt, should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is 'his best judgment' and not of anyone else. The High Court could not substitute its 'best judgment' for that of the assessing authority. 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 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.'
13. After analysing the facts and holding the petitioner guilty of suppression of taxable turnover, the Tribunal concluded that the tax suppressed by the appellant was to the extent of Rs, 14,88,806. The assessment of the suppressed amount was modified to the extent indicated in the order of the Tribunal. The appellate Tribunal took a lenient view and reduced the penalty of one and half times as imposed by the assessing authority. We are satisfied that the order of the Appellate Tribunal sought to be revised is based upon proper appreciation of findings, relevant provisions of law and critical analysis of the documents which requires no interference. The revision filed before this Court is without any basis and substance. Therefore, the revision petition is dismissed with costs assessed at Rs. 5,000.