Assessment orders quashed, cases remitted for fresh disposal; Respondent to pay costs for contumacious conduct.

The court quashed the assessment orders and remitted the cases for fresh disposal in compliance with the Appellate Assistant Commissioner's directions. The respondent was ordered to personally pay the costs of the petitioners due to his contumacious conduct.

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Issues Involved:
1. Rejection of the petitioner's books of account and estimation of turnover.
2. Denial of opportunity to cross-examine the representatives of M/s. Munnalal Bhalotia & Co. and M/s. Bata Shoe Company.
3. Allegation of violation of natural justice.
4. Compliance with the direction of the Appellate Assistant Commissioner.
5. Misconduct and refusal to implement directions by the Sales Tax Officer.

Issue-wise Detailed Analysis:

1. Rejection of the petitioner's books of account and estimation of turnover:
The respondent, Sales Tax Officer, Palai, rejected the petitioner's books of account and estimated the turnover at nearly twice the amounts returned by the petitioner. This was based on the observation that large quantities of purchases were recorded in the names of three fictitious persons in the account books of M/s. Munnalal Bhalotia & Co. and M/s. Bata Shoe Company. The petitioner denied making any sales to these companies beyond those disclosed in his books of account.

2. Denial of opportunity to cross-examine the representatives of M/s. Munnalal Bhalotia & Co. and M/s. Bata Shoe Company:
The petitioner requested to cross-examine the representatives of the aforementioned companies to establish his case. This request was refused by the respondent. The Appellate Assistant Commissioner of Sales Tax, Kottayam, in his orders, directed the respondent to provide the petitioner with an opportunity to cross-examine these representatives. However, the respondent did not comply with this directive, citing the non-existence of these companies as a reason.

3. Allegation of violation of natural justice:
The petitioner contended that the rejection of their books of account and the estimation of turnover without allowing cross-examination violated the principles of natural justice. The Appellate Assistant Commissioner supported this contention, stating that the additions to the turnover based on entries in the account books of third parties without providing an opportunity for cross-examination could not be sustained. This view was reinforced by the decisions in M. Appukutty v. State of Kerala and Appukutty v. Sales Tax Officer, Kozhikode.

4. Compliance with the direction of the Appellate Assistant Commissioner:
Despite the clear direction from the Appellate Assistant Commissioner to allow cross-examination, the respondent confirmed his previous assessments without complying. The respondent justified his actions by referencing the Gujarat High Court decision in Jayantilal Thakordas v. State of Gujarat and the Supreme Court's ruling in Dhakeswari Cotton Mills' case, arguing that the denial of cross-examination did not violate natural justice if the details were communicated to the assessee.

5. Misconduct and refusal to implement directions by the Sales Tax Officer:
The court found the respondent's refusal to follow the appellate authority's direction and the decision of the Kerala High Court as gross misconduct. The respondent's assertion that the companies had ceased to function was found to be untrue, as evidenced by the petitioner's uncontested statement that these firms were still in existence. The court emphasized that such refusal to comply with superior tribunal directions amounted to a denial of justice and was destructive to the administration of justice.

Conclusion:
The court quashed the assessment orders (exhibit P-6 in O.P. Nos. 3695 and 3697 of 1969 and exhibit P-7 in O.P. No. 3936 of 1969) and remitted the cases to the respondent for fresh disposal in compliance with the Appellate Assistant Commissioner's directions. The respondent, Shri N. Venkitachalam, was ordered to personally pay the costs of the petitioners due to his contumacious conduct. A copy of the judgment was to be forwarded to the Board of Revenue, Trivandrum, for information.

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