The exercise of revisional power under section 22a should be based on errors in approach, computation, or application of relevant law, rather than arbitrary exercise of power.

K. SHIVASHANKAR BHAT, J.

( 1 ) THE order of the Commissioner of Commercial Taxes made in the exercise of his suo motu power of revision under section 22a is challenged herein. By this order, the Commissioner held that the disallowance of the exemption relating to buying agency transaction regarding dhania of the ought to be computed for the two months, and not to be confined to Rs. 74,032. 26 being the turnover not properly accounted for at the time of inspection. Since the inspection was held on december 20, 1979, and the accounting year commenced on October 22, 1979, the commissioner held that the actual discovered escapement should be the basis to estimate the escaped turnover for the period from the date of commencement of the accounting year till the date of the discovery of escapement. For this relied on the decision of the Supreme Court reported in Commissioner of Sales Tax v. H. M. Esufali H. M. Abdulali [1973] 32 STC 77. The appellate authority had, while partly reversing the order of the assessing authority, held :

"the argument of the learned counsel has some force and deserves consideration. The assessing authority has not pointed out any omission in the books of account after the date of inspection. In the absence of any material to show that there was omission or suppression, the assessing authority is not justified in rejecting the exemption claimed by the appellant in respect of dhania, jaggery, turmeric and ambada seeds for the entire year. At most, he should have confined the rejection of exemptions in respect of the above commodities up to the date of inspection. This finds support from the case reported in [1976] 37 STC 184 (Ker) (Ittymathew Son v. State of kerala ). In the said case, it was held that 'suppression of turnover found in the slips can form nexus only for the period earlier than the detention and it cannot be considered to give any nexus for a future period'. The above decision is equally applicable to the facts of the case on hand. Therefore, the rejection of exemption on buying agency transactions is restricted to the period on and prior to the date of inspection. As could be seen from the records, the appellant had effected any transaction in the capacity of buying commissioner agents prior to December 20, 1979, in respect of jaggery, ambada seed and turmeric. However, there were six transactions in dhania on and prior to December 20, 1979, amounting to Rs. 61,694. 26. As this is the purchase value of transactions, the sale value of the said purchases is arrived at Rs. 74,033. 26 after adding a gross profit of 20 per cent. Regarding jaggery found at the time of inspection, the same was recorded in the Nond book. The same was made crystal clear that it was received on December 20, 1979, for sales. The appellant had stated that he would produce the 'nond book' for verification if the assessing authority desired to verify it again while furnishing the replies to form 31a. However, the assessing authority did not look into it again overrule the objection stating that no such book was produced before the inspecting authorities on the day of inspection. As the jaggery received from principal has been recorded in Nond book and the same was disposed on December 22, 1979, as selling commission agent paying taxes thereon, levy of tax on the value of 289 bags of jaggery is unwarranted and amounts to double taxation on the same transaction. As such levy of tax on jaggery amount to Rs. 34,680 is illegal therefore, the same is deleted. To sum up, the assessing authority instead of disallowing the exemption on the turnover of Rs. 14,04,852. 77 declared by the appellant as buying commission agent for the entire year, should have disallowed the claims only on Rs. 74,852. 28 in respect of dhania. Consequently the appellant succeeds in this respect partly. "

( 2 ) THEREAFTER, regarding penalty, the appellate authority after referring to section 12 (4) held that the ingredients to apply section 12 (4) were not

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