JUDGMENT

MISRA, C.J. - The two questions referred to this court for answer under section 24(1) of the Orissa Sales Tax Act are as follows :

"(1) Whether the taxing officers are precluded from making a fair and reasonable guess about the rate of profit if the same is found to be low on a consideration of the local conditions though the accounts as maintained are found to be correct.

(2) Whether in the facts and circumstances of the case the estimation of profit rate as made is justified or is arbitrary based on surmises and conjectures."

2. The facts leading to this reference are clearly stated in the reference order. The quarter in respect of which the assessment has been made relates to the quarter ending with 31st December, 1958. The dealer is a wholesaler in grocery articles. He returned a profit at a rate of 4 per cent, in his account books. The assessing officer is of opinion that the normal profit in the locality in such business would be between 8 per cent. to 12 per cent. He accordingly estimated the rate of profit at 8 per cent. and enhanced the returned figures. The first appellate authority estimated the rate of profit at 6 1/4 per cent. The Tribunal upheld the order of