The court clarified the circumstances under which an assessment under Sec.10 (3) of the Bihar Sales Tax Act, 1944, is valid, the conditions for claiming a deduction under Sec. 5(2)(a)(i) of the Act, and the inclusion of sales tax realized by the dealer in computing the gross turnover for taxable income.

Sarjoo Prosad, J.

1. These Miscellaneous Judicial Cases arise out of references made by the Board of Revenue, Bihar, under Sec.21 (3) of the Bihar Sales Tax Act of 1944 (Act VI of 1944) in pursuance of an order of this Court dated the 22nd of April, 1949. The refer-ences relate to different periods of assessment though the assessee in each case is the same and the points involved are common.

2. There were four points formulated by this Court on which the Board was asked to state a case, but Mr. Baldeo Sahay, appearing on behalf of the assessee, has not pressed the first point. Therefore, it is unnecessary, to refer to it. The other three points are : (1) Whether in the circumstances of this case the assessment made under Sec.10 (3) of the Act was legal and valid; (2) Whether in the circumtances of this case the Sales Tax Officer was justified in refusing the deduction claimed under Sec. 5 (2) (a) (i) of the Act; and (3) Whether the amount of sales-tax realised by the dealer can be added in order to arrive at a gross turnover for computing the taxable income.

(2a) It is not relevant, in my opinion, to refer to the different stages of the case, but I will deal with the relevant facts in so far as the points involved are concerned. I would dispose of first of all questions (1) and (3).

3. On the first question it is contended that the assessment made under Section 10(3) of the Act was illegal. It may be observed that in addition to lac and catechu, the assessee is a dealer in various other kinds of goods; for instance, oil seeds, ropes, gum, honey and bee-wax, etc. The Sales tax officer did not rely on the assessees figures in regard to the sale of those goods during the periods of assessment. He also felt that the assessee had suppressed the amount of actual sale of those goods, and for these reasons the officer determined the turnover on account of the sale of those goods at a round figure of Rupees 5 lakhs which under the circumstances he considered to be quite reasonable. The Commissioner of Sales-tax agreed with that assessment and upheld the figure so assumed by the Sales Tax Officer; and the Board of Revenue also in revision held that on this point there was no ground for interference. The assessment on the face of the order appears to be under Sec.10 (3) of the Sales Tax Act. It is contended by the assessee that the question of assessment under Sec.10 (3) of the Act only arises where there has been non-compliance with the terms of the notice under Sec.10 (2) (a). In this case, according to the contention of the learned Counsel for the assessee, there was no non-compliance with the terms of the notice given to the assessee to produce his papers and books of accounts. It is pointed out that the relevant documents called for from the assessee, according to the terms of the notice, had been duly produced before the Sales Tax Authorities, and that being so, an assessment under Sec.10 (3) of the Act was unwarranted. On the other hand, it is suggested that the correct procedure to adopt was to give a further opportunity to the assessee to prove his case, or to verify the evidence adduced by some other procedure to be adopted by the Sales Tax Officer before he could make any assessment. In doing so, it is argued, the Sales Tax Officer could rely upon any material that came to his knowledge but he could not proceed to act under Sec.10 (3) of the Act when the terms of the notice had been fully complied with by the production of the relevant books and documents. Reliance has been placed upon a decision of this Court, in --Raghu Nath Mahadeo V/s. Cornmr. of Income-Tax, Bihar and Orissa, 6 Pat. L. T. 555.

The assessment in that case was under the Income Tax Act (XI of 3922). and the question which fell to be considered there was whether the assessment had been made under Sec.23 (4) or under Sec.23 (3) of the Act. Sec.23 (2) of the Act provided that if the Income-tax Officer had reason to believe that the return made under Sec.