G. Sivarajan, J.

The assessee is the revision petitioner and revenue is the respondent. The assessment year concerned is 1993-94. The assessee is a jeweller having main business place at Kunnamkulam and a branch at Kozhikode. There was an inspection of the main business place at Kunnamkulam on 2.6.1993 and inspection of the branch at Kozhikode on 21.2.1994. In the inspection conducted at the main business place it was found that the actual new gold ornaments available were 1557.300 grams and silver ornaments were 1627.500 grams. Two business slips were also recovered. Subsequent verification of the books of accounts with reference to the F.I.R. revealed shortage of 4.750 grams of new gold ornaments and excess quantity of 45.150 grams of silver ornaments. The seized slips also revealed unaccounted sales of gold ornaments of 17.200 grams. The inspection conducted in the branch showed the quantity of new gold ornaments at 11350.250 and old gold at 71.00 grams. Subsequent scrutiny of the books of accounts with reference to the F.I.R. revealed a shortage of 5.705 grams of new gold ornaments. The purchase turnover was worked out at Rs.29,847.40. Based on these discrepancies in the account, the assessing authority proposed to reject the books of accounts and to estimate the turn over by adopting the running stock method. After considering the objections filed by the assessee that the stock variation found at the time of inspection was very negligible, the assessing authority completed the assessment as proposed and estimated the taxable turnover at Rs.31,62,610/-. For arriving at this figure the assessing authority has taken the average running stock and added 90% of the same towards purchase turnover estimated. In appeal by the assessee, the 1st appellate authority confirmed the said assessment. In further appeal by the assessee, the Tribunal, while upholding the rejection of accounts, modified the estimate by directing the assessing authority to estimate the turnover by adopting 1/2 times the average running stock and by adding corresponding purchase turnover. Being aggrieved by the order of the Tribunal, the assessee is in revision before this Court.

2. Learned counsel appearing for the assessee submits that though inspections were conducted in the main business place and in the branch, the inspecting authority could find only very negligible stock variation in gold ornaments, and therefore, the estimation of turnover on the basis of running stock is highly illegal.

3. Government Pleader appearing for the respondent, on the other hand, submitted that the assessing authority and the two appellate authorities were perfectly justified in adopting the running stock method and the Tribunal was justified in sustaining the estimate at 1/2 times the average running stock.

4. We have considered the rival submissions. The stock variation found based on the two inspections conducted by the Salestax department was shortage of 4.750 grams of new gold ornaments in the main business premises, besides the unaccounted sales of gold ornaments revealed from the two slips of 17.200 grams; and shortage of 5.705 grains of new gold ornaments at the branch. This is besides the difference in stock (excess) of silver ornaments found in the main business premises. No other discrepancies are seen noted by the assessing authority. It is on the basis of these discrepancies the assessing authority rejected the books of accounts and resorted to estimation of turnover by adopting the running stock method. The average running stock of the business came to Rs.25,27,725/-. The assessing authority has adopted that amount and added a sum of Rs.22,74,952.50, being 90% of the average running stock, towards purchase turnover. The taxable turnover came to 31,62,610/- as against Rs.8,43,998 returned by the assessee. Though the first appellate authority dismissed the appeal filed by the assessee, the Tribunal has modified the estimate by reducing it to half the taxa