Assessing authorities can issue revised pre-assessment notices but must do so based on valid reasons to avoid arbitrariness.

1The Judgment of the Court was delivered by Paripoornan, J.- These are connected cases. The Revenue is the petitioner in both the revisions. The same assessee is the respondent in both the revisions. Both the revisions relate to the same assessment year, 1984-85. The Sales Tax Appellate Tribunal, Thiruvananthapuram disposed of T.A. Nos. 175 of 1988 and 878 of 1989 by a common order dated 2nd March 1990. TRC No. 62 of 1991 is filed against the order passed in T.A. No. 175 of 1988 and. T.R.C. No. 173 of 1991 is filed against the order passed in T.A. No. 878 of 1989.

2 We heard the revisions together. The short facts relevant for the purpose of determining the controversy in the cases are as follows: The respondent assessee is a dealer in aluminium vessels, steel vessels, etc. There was an inspection of the business premises on 23rd May 1984. Excess and shortage of stocks were noticed. The irregularities noticed were admitted and the assessee compounded the offence depart mentally, on payment of Rs. 750. The assessee had reported a taxable turnover of Rs. 1,14,054. A pre-assessment notice was served by the assessing authority on 14th November 1986 proposing to reject the accounts and the returns for the year 1984-85 and estimating the taxable turnover at Rs. 1,71,255. The assessee filed a reply thereto, objecting the proposals on 26th November 1986. While so, on 2nd December 1986, the assessing authority issued a revised pre-assessment notice changing the original proposal to add 50 per cent to the conceded turnover for omissions and suppressions and proposing to estimate the turnover at three times the average running stock of different items. The assessment was completed on 31st December 1986 on a taxable turnover of Rs. 4,89,510. In first appeal, the Appellate Assistant Commissioner, by order dated 26th May 1987, set aside the assessment and ordered a remit. The assessee filed a second appeal against the said order of remit before the Sales Tax Appellate Tribunal as T.A. No. 175 of 1988. After remit the assessing authority made a revised assessment on 31st July 1987 and fixed the taxable turnover at Rs. 5,08,930. Against this revised assessment order, the assessee filed a first appeal, which was partly allowed by the Appellate Assistant Commissioner by order dated 29th July 1989. The assessee, not satisfied with the said appellate order, filed a second appeal before the Appellate Tribunal as T. A. No. 878 of 1989. T. A. Nos. 175 of 1988 and 878 of 1989 were considered together by the Sales Tax Appellate Tribunal and a common order dated 2nd March 1990 was passed.

3 The Appellate Tribunal found that there was no legal and factual basis for the assessing authority to issue a revised pre-assessment notice on 2nd December 1986 and the estimate based on the revised pre-assessment notice dated 2nd December 1986 is not sustainable in law. The first appellate authority, having found on facts that there was no material to review the original proposal, was in error in directing that the assessing authority should find out fresh evidence and complete the assessment on the basis of such materials. The Sales Tax Appellate Tribunal opined that having held that there was no reason or material to issue the revised pre-assessment notice dated 2nd December 1986, the Appellate Assistant Commissioner was in error in directing the assessing authority to find out fresh evidence and to make a fresh assessments. In this perspective, the Appellate Tribunal held that the conclusion of the first appellate authority is incorrect, which amounts to direct the assessing authority to find out fresh materials or defects against the assessee and enhance the estimate and so the order of remit is unauthorised. The Appellate Tribunal set aside the order passed by the first appellate authority ordering the remit in T.A. No. 175 of 1938 and held that the assessment on the basis of the revised pre-assessment notice is clearly unsustainable. Having held so, the Appella