R.N. Misra, J.
1. The Member, Sales Tax Tribunal, Orissa, has referred the following two questions under Section 24(1) of the Orissa Sales Tax Act (briefly referred to as the Act), for our determination:
(1) Whether, in a proceeding under Section 12(8) of the Orissa Sales Tax Act, there is scope for best judgment assessment?
(2) Whether, in the facts and circumstances of the case, the Member, Sales Tax Tribunal, is right in limiting the amount of escapement of the turnover to the actual amount of escapement detected?
2. The short facts collected from the statement of the case made to this court are these: The assessee is a registered dealer dealing in electrical goods, automobile parts, wireless sets, furniture, etc. For the year 1966-67, it was assessed under Section 12(2) of the Act. While the assessing officer was dealing with the assessment of another dealer, on cross verification, a suppression of purchase in the assessee's account was noticed. The transaction took place on 11th January, 1968, and was to the tune of Rs. 232.05. The proceedings under Section 12(8) of the Act were thereafter taken against the assessee and on 21st December, 1968, a best judgment assessment was completed.
The assessee's first appeal was dismissed but the enhancement of Rs. 6,000 adopted at the assessment stage was reduced. The assessee appealed to the Tribunal. The Tribunal held:. In the regular assessment a small defect was found for which there had been an estimate and the enhancement was Rs. 2,000. It was in view of that that the learned first appellate authority reduced this Rs. 6,000 enhancement to Rs. 2,000. It was contended on behalf of the appellant that the present omission is without mala fides, the purchase having been made by the utilisation of the registration certificate and further the omission having been covered by the previous enhancement in the regular proceeding, the present enhancement of Rs. 2,000 is unsustainable. I think, there is some substance in the argument. Even then in the 12(8) proceeding, I would bring down the enhancement to the actual omission, i. e., Rs 232.05 and the penalty from Rs. 50 to Rs. 15....
Thereupon the State of Orissa represented by the Commissioner of Sales Tax applied to the Tribunal to refer the following question of law to this court:
Whether, in the facts and circumstances of the case, the learned Member, Sales Tax Tribunal, is right in holding that the amount of enhancement in a reassessment proceeding under Section 12(8) of the Orissa Sales Tax Act should be limited to the actual amount of escapement detected?' and the Member, Sales Tax Tribunal, has referred the two questions already extracted above to this court.
3. The original assessment completed under Section 12(2) of the Act on 24th June, 1968, was not on the record. During argument, the asses-see's counsel provided us with copies thereof with the consent of the learned standing counsel. This order of assessment shows that the Sales Tax Officer came across a mistake in the accounts of the assessee. He held:
On verification of the purchase register of the dealer for December, 1967, it was found by the Inspector that four dozens of 'No. 950' and one dozen of 'No. 935' Eveready batteries though purchased from Shri Mulji Ramjee of Rayagada on 9th December, 1967, on furnishing declaration has not been accounted for in the purchase account for December, 1967. The dealer was confronted with this report to which he explains that their mechanic Shri M. Laxmana Rao who brought it from Mulji Ramjee kept the above batteries separately and has never told the dealer about the same and after the Inspector's detection, accounted for the said purchases worth Rs. 37.05 in the month of January, 1968, which also appears to be an insertion in the purchase account. The explanation of the dealer is not the least convincing particularly because the mechanic is not the owner of the shop and even if he has brought the batteries from Shri Mulji Ramjee, the same must have been made over to the proprietor or partner of the shop and it is not expected that the batteries would lie undetected even till March, 1968. In fact, some of these batteries must have been sold during the period from December, 1967, to March, 1968. I, therefore, reject the contention of the dealer.
On account of the above anomalies, I consider it reasonable to enhance the gross turnover of the dealer by Rs. 2,000....
In the order made under Section 12(8) of the Act, the assessing officer stated:
All purchases are claimed to be supported by bills. Sales are also effected through issue of bills. Purchase and sale registers are also maintained. But the dealer is not maintaining any stock register, even though the maintenance of such a register is easy on account of the purchases and sales being vouched. No stock-taking is done at any time as a result of which it is not possible to know the correctness of purchases and sales.
The present proceedings under Section 12(8) of the Orissa Sales Tax Act have been opened upon the dealer having been detected by an Inspector of this department not to have accounted for purchases of electrical bulbs made from M/s. K.S. Kumundan Sons of Rayagada on 11th January, 1968, worth Rs. 232.05 against bill No. 64-7 dated 11th January, 1968, of the sellers. The managing partner while giving a statement before the Inspector states that no such purchase was made by the dealer. The seller being a registered dealer was issued a declaration by the managing partner of the firm for these purchases but it is curious to know that he contends not to have purchased the same. Before me, of course, the managing partner contends that during his absence in the shop from 8th January, 1968, up to Pongal, he gave some blank declarations signed by him to his brother Sri Ramakrishna Rao for purchasing goods necessary during his absence, and that during such a period Sri Ramakrishna Rao purchased those bulbs on 11th January, 1968, but forgot to enter the same in the purchase register. This contention appears to be incorrect in view of the fact that at the stage of original assessment, a similar purchase from a registered dealer was not accounted for as a result of which the accounts have been rejected. This is the second instance during the year 1967-68 and evidently, therefore, seems to be a habit with the dealer.
The dealer next contends that it had no intention to suppress the purchases in view of the fact that it had duly accounted for sales and that the dealer having knowledge of such purchases being verified would not venture to suppress purchases intentionally. As already stated by me in para 1, the dealer is not maintaining a stock register to know the balance on hand. As such, it is difficult to know if actually the bulbs purchased on the strength of declaration have actually been sold. I can, on the other hand, say that the suppression was intentional since this is the detection for a second time of its kind for the same year. There is also the possibility of such goods being brought from Vizianagaram personally without being accounted for.
In view of my above findings, I reject the books of account of the dealer and enhance the gross and taxable turnover by Rs. 6,000 each in addition to the enhancement of Rs. 2,000 made at the time of original assessment....
The first appellate authority agreed that the accounts were liable to be rejected. Dealing with the estimates to be adopted, it stated:. In the instant case there is only one instance when the purchase involving a. sum of Rs. 232.05 was not accounted for in the books of account. For similar reasons an addition of Rs. 2,000 was made to the G.T. 0. while passing the original assessment to cover up the probable omissions. In the present case there has been determination of escaped turnover to the extent of Rs. 6,000. Considering the single transaction pertaining to the purchase as indicated above, which was not accounted for, it would be fair and reasonable if the enhancement is limited to Rs. 4,000. The contention advanced in regard to the exclusion of goods taxable at the rate of 10 percent in respect of added turnover cannot be entertained as the facts of the case, as discussed above, do not admit of any doubt in regard to the incompleteness and incorrectness in the maintenance of accounts. The reduced turnover of Rs. 2,000 is distributed between the different tax rate groups in the following manner....
The appellate authority had thus sustained the enhancement of Rs. 2,000 to the turnover in the reassessment proceeding.
4. Before us, counsel for the assessee does not contend that the books of account were not liable to be rejected. The question that has been mooted and argued at considerable length with vehemence by Mr. Misra for the assessee is on the conceded footing that even when the accounts were liable to be rejected, there was no scope for a best judgment assessment in a proceeding under Section 12(8) of the Act. It has also been contended that there having already been a best judgment assessment under Section 12(2) of the Act for the same period, a second best judgment assessment is not permissible.
5. Section 12(8) of the Act as far as material provides:
If for any reason the turnover of a dealer for any period to which this Act applies has escaped assessment...the Commissioner may at any time within thirty-six months from the expiry of the year to which that period relates call for a return under Sub-section (1) of Section 11 and may proceed to assess the amount of tax due from the dealer in the manner laid down in Sub-section (5) of this section....
Sub-section (5), as far as relevant, provides:
If upon information which has come into his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless without sufficient cause failed to apply for registration, the Commissioner shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period....
Mr. Misra contends that the statute does not authorise the making of a best judgment assessment in a reassessment proceeding under Section 12(8) of the Act. According to him, the mandate in Section 12(8) of the Act that the reassessment shall be done in the manner laid down in Sub-section (5) of Section 12, goes to show that the procedure or mode indicated in Section 12(5) of the Act has to be followed and not that the assessment itself can be according to best of judgment. Learned standing counsel, on the other hand, contends that the mode or manner for completion of the reassessment under Sub-section (8) has to be in the manner laid down in Sub-section (5), namely, according to best of judgment. Reliance was placed by Mr. Misra on A braham's case [1967] 20 S.T.C. 367 (S.C.), where adverting to the expression 'in the prescribed manner' the learned Judges of the Supreme Court have said:. In our opinion, the phrase 'in the prescribed manner' occurring in Section 8(4) of the Act (Central Sales Tax Act) only confers power on the rule-making authority to prescribe a rule stating what particulars are to be mentioned in the prescribed form, the nature and value of the goods sold, the parties to whom they are sold, and to which authority the form is to be furnished. But the phrase 'in the prescribed manner' in Section 8(4) does not take in the time-element. In other words, the section does not authorise the rule-making authority to prescribe a time-limit within which the declaration is to be filed by the registered dealer. The view that we have taken is supported by the language of Section 13(4)(g) of the Act which states that the State Government may make rules for 'the time within which, the manner in which and the authorities to whom any change in the ownership of any business or in the name, place or nature of any business carried on by any dealer shall be furnished'. This makes it clear that the Legislature was conscious of the fact that the expression 'in the manner' would denote only the mode in which an act was to be done, and if any time-limit was to be prescribed for the doing of the act, specific words such as 'the time within which' were also necessary to be put in the statute. In Stroud's Judicial Dictionary it is said that the words 'manner and form' refer only 'to the mode in which the thing is to be done, and do not introduce anything from the Act referred to as to the thing which is to be done or the time for doing it'....
We are of the view that the aforesaid analysis of the position does not support Mr. Misra's contention. On the other hand, learned standing counsel's contention is supported by the analysis.
Sub-section (8) of Section 12 of the Act prescribes the mode for completion of the assessment. Under Sub-section (8), once the assessing authority decides to reopen the matter because any of the three contingencies mentioned in the sub-section happened (here a part of the turnover has escaped assessment) he is to call for a return under Section 11 of the Act. Section 12 makes exhaustive provision regarding completion of assessment. In fact the various sub-sections deal with different contingencies. Subsections (3), (4) and (5) authorise completion of assessments according to best of judgment. Section 12 deals with assessment of both registered as also unregistered dealers. Under Sub-section (8) all reassessments whether of registered dealers or of unregistered dealers have been directed to be completed in the manner laid down in Sub-section (5), i. e., provisions applicable only to unregistered dealers. Of the various modes prescribed under Section 12, the mode that the Legislature has required to be adopted in reassessment proceedings is that provided under Sub-Section (5) of Section 12. The requirement in Sub-section (8) that the Sales Tax Officer 'may proceed to assess the amount of tax due from the dealer in the manner laid down in Sub-section (5) of this section' goes to show, in our view, that after the return is called for, the mode of assessment shall be as indicated in Sub-section (5), i. e., the assessee has to be given a reasonable opportunity of being heard and the assessment has thereafter to be completed according to the best of the assessing officer's judgment.
Mr. Misra's emphatic contention is that if the Legislature contemplated that the reassessment had to be completed according to best of judgment, there could have been no difficulty in clearly saying in Sub-section (8) that the assessment has to be completed according to best of judgment. It is a well-known draftsman's device that instead of repeating provisions indicated in one section, reference is made to that particular section so that while interpreting the provisions of the incorporating section, the incorporated provision has to be read as if occurring in the incorporating section.
6. Escapement of a part of the turnover of an assessee may result from various factors: the assessee may have accounted for the turnover and the assessing officer may have by mistake omitted to bring the turnover into the net of assessment. The assessee may have suppressed a part of the turnover as a result whereof there may be an escape of that part of the turnover from assessment. Where the taxing officer comes to hold that a part of the turnover has escaped assessment on account of suppression of that turnover from the accounts, the accounts become liable for rejection and where the accounts are rejected, there is no other material on the basis whereof the assessment can be framed; a situation does arise in which the assessment has got to be completed according to the taxing officer's best of judgment. On a bare analysis of this type, Mr. Misra's contention could be thrown out.
7. Several decisions had been placed before us supporting the rival contentions of the assessee and the department in this regard. We now propose to refer to the cases of both sides separately and ultimately indicate our view. We start with the assessee's cases.
8. In State of Andhra Pradesh v. Ravuri Narasimloo [1965] 16 S.T.C. 54, the Andhra Pradesh High Court referring to the provisions of their Act stated:
The question that calls for determination in this case is whether the concept of best judgment could be imported into this sub-section also. Incontestably that power vested in the authority both under Sub-sections (1) and (3). But does Sub-section (4) also confer the same power on the department?
It is necessary in this behalf to notice the difference in language between Sub-sections (1) and (3) on the one hand and Sub-section (4) on the other. The crucial words in Sub-section (1) which is similar to Subsection (3) are 'and after making such inquiry as he considers necessary assess to the best of his judgment, the amount of tax due from the dealer' while the words used in Sub-section (4) are 'assess the tax payable on the turnover which has escaped assessment or levy the correct amount of licence fee or registration fee after issuing a notice to the dealer and after making such inquiry as he considers necessary'. Can it be said that the content of the expression occurring in Sub-section (4) is the same as of the relevant clause in Sub-section (1)? We feel it very difficult to posit that the connotation of both the clauses is the same. While power is given under Sub-sections (1) and (3) to make the best judgment assessment, the power under Sub-section (4) of the department is limited to the assessment of turnover which has escaped assessment.
In our considered opinion, this implies an escapement which is definitely established. We are unable to accept the contention raised on behalf of the department that this phrase 'which has escaped assessment' can imply turnover which could inferentially be said to have escaped. We think it has relation to escapement which is definitely proved and it does not take in a turnover which might have escaped assessment. The difference in phraseology in the different sub-sections denotes different notions and it is difficult to equate the power vested in the department under Sub-section (4) to that conferred on the authority under Sub sections (1) and (3). It seems to us that the Legislature has advisedly confined the power of the department to assessing such turnover as is shown to have escaped and did not extend it to estimates depending upon inferences to be drawn by the department from certain circumstances. We do not think that this sub-section clothes the department with power to make a best judgment assessment.
The position came to be examined by a Full Bench of the Madras High Court in P.S. Subramaniam Chettiar and Sons v. Joint Commercial Tax Officer III, Dindigul [1966] 18 S.T.C. 357. While dissenting from an eariier Bench decision of their own court, D. Sreenivasappa v. Stale of Madras [1964] 15 S.T.C. 784, and the Madhya Pradesh decision in Commissioner of Sales Tax v. Kunte Brothers [1962] 13 S.T.C. 366, and approving the decision of the Andhra Pradesh High Court in the case of State of Andhra Pradesh v. Ravuri Narasimloo [1965] 16 S.T.C. 54, the Full Bench came to hold:
It has been contended for the State that power to assess would include also power to assess by best judgment. But in the context of the other provisions like Sections 12 and 13 and the legislative history which we referred to, it is not possible to accept this contention. In a taxing statute, like any other statute, we are concerned with the express language used and there is hardly any room for implication in the section of power which is not there expressly given, for, the same statute clearly shows that wherever a power to assess by best judgment is contemplated, it is expressly given. The result of the contrast of the language of Sections 12 and 13 with that of Section 16(1) and the legislative history we referred to necessarily repels any possibility of implied power in Section 16(1) to assess by best judgment.
9. On behalf of the revenue, learned standing counsel relied upon the following cases:
In Commissioner of Sales Tax v. Kunte Brothers [1962] 13 S.T.C. 366, a Bench of the Madhya Pradesh High Court dealing with the situation stated:
The second question is whether best judgment assessment under Section 8 can be made in proceedings under Section 10. There is nothing in Section 10 to indicate that best judgment assessment cannot be made in proceedings for the assessment of any escaped turnover. Indeed, the provision in Section 10 that the escaped turnover shall be determined after issuing a notice to the dealer and after making necessary inquiry contemplates that a notice in conformity with Section 8 should be given and that the inquiry should be held in accordance with Sub-sections (2) and (3) of Section 8. If, therefore, when a notice is issued to the assessee under Section 8 and he is also called upon to produce his account books and other relevant records for scrutiny, and if the assessee fails to appear in response to this notice and fails to produce the material required of him, the assessing authority has jurisdiction to determine the escaped turnover to the best of his judgment. Under Section 10 the burden of proving that any turnover has escaped assessment or that there has been under-assessment is no doubt upon the department; but this only means that in order to justify initiation of proceedings under Section 10 it is necessary for the assessing authority to establish at least one transaction the turnover of which was not included in the previous assessment. Once that is done, it is for the assessee to satisfy that no turnover has escaped assessment or that the escaped turnover is of a certain magnitude. If the assessee fails to discharge this burden by failing to appear or failing to produce his account books despite a notice under Section 10, then the assessing authority is entitled to form its own opinion about the escaped turnover. In this connexion it will be pertinent to refer to the decision in Rosette Franks (King Street) Ltd. v. Dick (H.M. Inspector of Taxes) (1955) 30 Tax Cas. 100. That was a case in which additional assessment was made by the Commissioner according to his own estimate, after finding that the account books of the assessee could not be relied upon to show the whole of the trading profits. The Commissioner was able to prove only one incident of escaped assessment. In these circumstances, it was observed by Danckwerts, J., as follows:
'It is perfectly true that this is only one incident, and the one incident only, which the Inspector of Taxes was able to establish before the Commissioners; but it was open to the Commissioners, as it seerns to me, to conclude that this was not merely an isolated transaction but showed the kind of thing which was going on, and they were, in my view, entitled to come to the conclusion to which they did come from this incident, though one only, that there must have been other similar incidents and, therefore,that the accounts of the company could not be relied upon to show the whole of the trading profit of the company.'
These observations show that an estimate of escaped turnover or income can be made if the assessee fails to produce his account books or if the account books are found to be unreliable by the taxing authority....
In D. Sreenivasappa v. The State of Madras [1964] 15 S.T.C. 784, a Bench of the Madras High Court dealing with the position stated:. According to the submission of the petitioner-assessee, when a question of assessment of escaped turnover under Section 16 arises, there is no scope for making an assessment to the best of judgment. He also points out that under the Sales Tax Act of 1939 in Rule 17(1) of the Madras General Sales Tax Rules, there is a provision for making an assessment of the escaped turnover to the best of judgment, but that provision is not found in the Act after its amendment in 1959 or in the Rules framed thereunder. We are unable to accept this contention. It might happen that the aramath account showed unexplained transactions for a specific period. But the manner of the conduct of the transactions might also show a continuation of the process of suppression for a much longer period and some times for the entire assessment year. In the latter contingency an estimate of the turnover for the extended period or for the whole year has necessarily to be made and that estimate can be made only to the best of judgment. The question whether the escape was for a particular period or for the whole year is a question of fact that has to be determined both from the anamath accounts, and also the circumstances of the case...
In Jayantilal Thakordas v. State of Gujarat [1969] 23 S.T.C. 11, a Bench of the Gujarat High Court dealt with the situation by saying:. it was contended in the alternative by Mr. Mody that in reassessment proceedings it was not open to the assessing authorities to assess on best judgment basis as they have done in the case of first assessment. In support of this proposition, he relied on the decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. Ravuri Narasimloo [1965] 16 S.T.C. 54. In that case, a Division Bench of the Andhra Pradesh High Court was dealing with Section 14(1) and (3) of the Andhra Pradesh General Sales Tax Act, 1957; and it held that these two sub-sections deal with power to make best judgment assessment at the time of the original assessment; and Sub-section (4) of that section concerns itself with bringing to tax turnover which has escaped assessment. According to the Andhra Pradesh High Court, the Legislature had confined the power of the department under the said subsection to assessing such turnover as is shown to have escaped assessment and has not extended it to estimates depending upon inferences to be drawn by the department from certain circumstances; and that it does not clothe the department with power to make a best judgment assessment....
It is important to note while dealing with this judgment of the Andhra Pradesh High Court that Section 15 of the Bombay Sales Tax Act, 1953, provides in connection with the reassessment proceedings that after the issue of the notice contemplated by Section 15(1), the assessing authority may proceed to assess or reassess the amount of tax due from such dealer and the provisions of the Act are to apply accordingly as if the notice were a notice served under Section 14(3) in respect of the original assessment. By virtue of those words occurring at the end of Sub-section (1) of Section 15, the Bombay Legislature has provided that so far as all stages after the issue of the notice are concerned, the original assessment proceedings and the reassessment proceedings are to stand on the same footing and in both proceedings the authority concerned has to follow the same procedure. Therefore, the power of best judgment, which can be exercised in respect of original assessment can be exercised in respect of reassessment proceedings also....
This decision also has taken into account the Full Bench case of the Madras High Court in the case of P.S. Subramaniam Chettiar and Sons v. Joint Commercial Tax Officer III, Dindigul [1966] 18 S.T.C. 357, relied upon by Mr. Misra in support of his contention and has brought out the distinction in the statutory provisions. Thereafter it has been stated:
It is also possible to take the view that the assessing authorities have come to the conclusion that the books of account of the assessee and the returns are not dependable as was found by the Supreme Court in Raghubar Mandal's case [1957] 8 S.T.C. 770 (S.C.); it is open to the assessing authority to form its own estimate of the gross turnover of the assessee and it appears that the Supreme Court has taken the view in Raghubar Mandal's case' that forming the best judgment assessment in such circumstances is a part of the process of ordinary assessment but in view of the fact that the Madras legislation and Andhra Pradesh legislation are different from the Bombay legislation, it is possible for us to distinguish the two decisions of the said two High Courts on that ground also.
In the case of H.M. Esufali H.M. A bdulali v. Commissioner of Sales Tax, M.P., Indore [1969] 24 S.T.C. 1, the Madhya Pradesh High Court came to state:
It is no doubt true that neither Section 19(1) nor Rule 33(1) and (2) provides in so many words that if a dealer does not appear or does not produce any evidence in response to a notice issued to him under Rule 33(1) (in Orissa Rule 23), then the assessing authority shall assess the dealer to the best of its judgment; but from this omission it does not follow that if the dealer does not appear and show that no turnover of his escaped assessment, or that if he did, it was not of the alleged magnitude, then the assessing authority cannot make an assessment even on the basis of the escaped turnover determined by itself. Such an absurd result is really not contemplated either by Section 19(1) or by Rule 33(1) and (2).
In the case of Kashi Jewellers v. Commissioner of Sales Tax, U.P., Lucknow [1969] 24 S.T.C. 291, the sole question for consideration was as to whether in a case of reassessment on the ground of escaped assessment, a best judgment assessment could be made. The learned Judges of the Allahabad High Court quoted with approval their court's earlier decision in M/s. Pooran Mal Kapoor Chand's case S.T.R. No. 147 of 1957 decided on 30th July, 1963, where it had been stated:
It seems to us that the learned Chief Justice did not, at the time when he made these observations, have in mind the facts of a case such as the one before us. If the whole basis of the original assessment is unsound, and it is found that the turnover has escaped assessment, we see no reason why the Sales Tax Officer should not be entitled to reopen the original assessment and reassess the turnover. We do not see why the right to make an assessment to the best of his judgment should be denied to him in such a case.
Then comes the decision of the Patna High Court in the case of Mittal & Company v. State of Bihar [1969] 24 S.T.C. 418. Sinha, J. (as the learned Judge then was), speaking for the Division Court stated:
It seems that the Bihar Act of 1959 includes 'best of judgment' assessment in a proceeding under Section 18 of the Act. According to that section the prescribed authority has to serve on the dealer a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 16 and proceed to assess or reassess the amount of tax due from the dealer in respect of a turnover which is believed to have escaped assessment. According to Section 18 itself, in a proceeding under that section the provisions of the Act shall, so far as may be, apply accordingly as if a notice under Section 18(1) was a notice under Section 16(2), and if for assessment or reassessment of an escaped turnover all the provisions of the Act apply so far as may be, then there is no reason why Section 16(3) will not be attracted to the assessment or reassessment....
10. Mr. Misra had relied upon a decision of the Supreme Court in the case of Sales Tax Officer, Ganjam, and Anr. v. Uttareswari Rict Mills [1972] 30 S.T.C. 567 (S.C.), where it was said:
As the provisions of Section 12(8) of the Act and Section 34 of the Indian Income-tax Act, 1922, are substantially similar, the dicta laid down in cases under Section 34 of the Indian Income-tax Act has, in our opinion, a direct bearing.
27. Mr. Misra had, therefore, referred to a number of cases under the Income-tax Act to support his contention that what could be added in the reassessment proceeding was the actual escapement of the income from taxation. We are not prepared to accept Mr. Misra's contention that there is no room for estimate in a proceeding under Section 34 of the Income-tax Act of 1922, or Section 147 of the Income-tax Act of 1961. In view of the specific provision in the Orissa Sales Tax Act to deal with the situation of reassessment, it is not necessary to deal with this contention of Mr. Misra.
11. It had been contended by Mr. Misra for the assessee that the first assessment under Section 12(2) of the Act having been completed according to best of judgment, another best judgment assessment was not possible under Section 12(8) of the Act. He relied upon a Bench decision of the Allahabad High Court in Footer MailMeghraj, Firozabad, Agra v. Commissioner, Sales Tax, Uttar Pradesh [1971] 28 S.T.C. 361, in support of this contention. There it had been stated:. However, if the original assessment is a best judgment assessment in respect of a particular source, no second best judgment assessment is permissible under law under Section 21 on the ground that the original estimate was low. In other words, it is not possible for the department to substitute one best judgment assessment by another merely on the change of opinion and in the absence of any fresh definite material. However, if some definite material comes into the possession of the department, which warrants a higher addition to the disclosed turnover than the one originally made on best judgment basis, it is open for the department to do so. But, in such a case, it is only just and proper that the addition already made in the original assessment must be deducted out of the addition which is proposed to be made under Section 21. That is not a rule of law but merely a rule of common sense.
This decision does not fully support the contention of Mr. Misra. It is true, and the learned standing counsel does not dispute it, and we must say fairly, that in respect of the suppression from the same source there cannot be two best judgment assessments, particularly when there is no fresh, definite material of suppression while proceeding to complete the second best judgment assessment.
A Bench of the Mysore High Court in S.K. Kalanji v. Commissioner of Commercial Taxes [1972] 29 S.T.C. 724 has rightly repelled the proposition of law advanced by Mr. Misra by saying:
Sri B.V. Katageri, the learned counsel for the assessee, contended that once an assessment was made under Section 12(3) on the best of judgment basis, such an assessment cannot be reopened and the escaped turnover cannot be brought to assessment under Section 12-A of the Act. This proposition, in our opinion, is too broad and cannot be accepted.
A decision of the Supreme Court in Commissioner of Sales Tax v. Bhagwan Industries (P.) Ltd. [1973] 31 S.T.C. 293 (S.C.), directly negatives Mr. Misra's contention. There the original assessment was made according to best of judgment. It was reopened and another assessment to the best of judgment was adopted.
12. As we have already said, in view of the mandate provided in subSection (8) of Section 12 of the Act that the reassessment shall be in accordance with Sub-section (5) thereof, there must be an end of the matter. The principle that has been indicated in the various cases referred to earlier is mostly on the basis of the special provision contained in, the statute which each of the decisions has referred to for coming to its own conclusion. We shall, therefore, summarize our conclusions thus:
(i) To an assessment made under Section 12(8) of the Act, the mode to be adopted is as indicated in Section 12(5) thereof.
(ii) The assessing officer is entitled to assess according to best of his judgment under Section 12(8) of the Act.
(iii) Even if the original assessment is according to the best of judgment, there can be a reassessment under Section 12(8) of the Act according to best of judgment.
(iv) Depending on facts of each case it has to be found out whether the original estimate could admit of the suppression now found at the reassessment stage within its fold. As indicated by the Allahabad High Court in Footer Mal Megh Raj, Firozabad, Agra v. Commissioner, Sales Tax, Uttar Pradesh [1971] 28 S.T.C. 361, it is more a rule of common sense than a rule of law. In this view of the matter, our answer to the first question shall be:
In a proceeding under Section 12(8) of the Act, there is scope for best judgment assessment.
13. In the instant case, one suppression of purchase was found at the original assessment stage. In the reassessment proceeding another suppression was found in the purchase account. The assessing officer has rightly indicated in the reassessment order that the suppressions were of similar type. That is why the first appellate authority also took into account the original estimate and confined the total estimate to Rs. 4,000, i. e., Rs. 2,000 as found on the first occasion and Rs. 2,000 by way of estimates at the reassessment stage. The Tribunal has confined the addition at the reassessment stage to the exact suppression found. In a given set of facts what would be the exact estimate would ordinarily be a question of fact. Unless the estimate made is arbitrary and without reference to any material on record, no question of law can arise out of such an assessment. In the present case, the Tribunal has accepted the assessee's contention that in the previous enhancement in the regular proceeding, the present suppression could have been accounted for. As we find, the two suppressions are on the same account. On the earlier occasion the estimate of Rs. 2,000 was made when the suppression found was to the tune of Rs. 37.05, it was on the footing that there were similar other suppressions in the purchase account which could reasonably be estimated at Rs. 2,000. The actual suppression found at the reassessment stage being to the tune of Rs. 232.05; it is quite possible that this could have been accommodated in the estimate made in the first occasion. In accepting the assessee's contention, the Tribunal does not seem to have made any error. The second question referred to us, therefore, turns out to be one of pure fact. The Tribunal was competent to make an estimate according to his best of judgment and in the facts of the case, no question of law arises out of that order. We accordingly decline to answer the second question.
14. The first question is, therefore, answered in favour of the revenue and against the assessee. The department shall have hearing fee of rupees one hundred.
B.K. Ray, J.
I agree.