The Judgment of the Court was delivered by

ANSARI, C.J. - The revision petitioner is a firm dealing in copra, pepper and other commodities, which had, for the assessment year 1957-58, furnished returns showing a net turnover of Rs. 13,241-84, and claimed exemption on Rs. 2,85,700-23, representing local sales covered by the licence. The Sales Tax Officer has rejected the returns, and has made assessment on the basis of the report by the Intelligence Officer, who had inspected the dealer's shop on 13th January, 1958. On that day the officer had recovered account sheets marked 'A', 'B', vouchers marked 'C' to 'J', and torn pieces of vouchers marked 1 to 127. It is admitted that the dealer's account books do not show the purchase of copra, evidenced by discarded account books and the torn vouchers; and on the basis of the aforesaid evidence, the taxing authorities have made the following addition to the copra account of the revision petitioner.

Copra sales from April 1, 1957 to September 30, 1957. Rs. 12,965-00 Addition on basis of what was recovered by the Intelligence Officer on the date of his surprise visit. Rs. 96,200-30 ------------------ Total Rs. 1,09,165-30 --------------------

The sales tax on copra till 30th September, 1955, was at the sale point at the rate of 2 naye paise in the rupee, and the petitioner was assessed to tax on the aforesaid amount at the aforesaid rate. Thereafter, the sales tax under a notification was levied on the last purchase point on copra at the rate of 4 naye paise in the rupee, and the taxing authorities have estimated the turnover taxable at this rate in the following way :-

Purchase of copra from October 1, 1957 to Rs. 1,80,615-10 March 31, 1958.

Addition of suppression of purchase amount of copra from October 1, 1957 to January 13, 1958. Rs. 3,75,792-45

It will be seen that the taxing authorities have accepted the dealer's returns, but have added to these returns, what they hold to be the suppressed amount of copra purchases and the additions are on the basis of what the Intelligence Officer had recovered on the date of his surprise visit to the petitioner's shop. It will be further seen that the addition works up to 742 per cent. of what was shown in the dealer's accounts, and the aforesaid 742 per cent. have been added for the entire period from 1st April, 1957, to 13th January, 1958.

It is not disputed that prior to the surprise visit the dealers had been making provisional returns, which were being accepted as correct. It is further not disputed that the stock register of copra during the period, when the tax was on the sale point of copra, had been checked, and nothing was found against their being incorrect. Nor the dealer's cash book for the entire period been treated by the taxing authorities as unsatisfactory. Indeed, the dealer had been treated, after the surprise inspection, to have honestly kept the accounts. It follows that the taxing authorities have added on the assumption that what was discovered on the date of the surprise visit was the prevailing rate for purchasing or selling copra right from April, 1957, up to January, 1958. They have further assumed that the same quantity of commodity would be available throughout the period. In the circumstances of the case, we think the aforesaid assessment to be arbitrary.

The explanation offered by the revision petitioner is that from 6th January, 1958, to 13th January, 1958, purchases from not less than 32 persons had not been entered in the account books, due to the inexperience of the person in charge of the business, and such an explanation has not been accepted because an experienced "Mooppan" in the shop was available. A further explanation offered was that the p