Wholesale dealer stock accounts are mandatory, and their absence can justify rejection of books and best judgment assessment.

A dealer selling to both consumers and other dealers fell within the definition of a wholesale dealer under the Tamil Nadu General Sales Tax Rules, 1959, and was required to maintain separate stock accounts. The stock account was treated as a necessary corroborative record for verifying the correctness of the books; without it, quantitative verification of stocks was not possible. On that basis, the assessing authority could reject the accounts and proceed to best judgment assessment, including an addition for possible suppression. The Tribunal's reduction of the addition on facts was left undisturbed.

---

---

Issues: (i) whether the assessees fell within the definition of "wholesale dealer" and were bound to maintain stock accounts under the Tamil Nadu General Sales Tax Rules, 1959; (ii) whether non-maintenance of the stock account justified rejection of the accounts and best judgment addition to turnover.

Issue (i): whether the assessees fell within the definition of "wholesale dealer" and were bound to maintain stock accounts under the Tamil Nadu General Sales Tax Rules, 1959.

Analysis: The definition of "wholesale dealer" covered persons selling goods to other dealers as well as to consumers. Since the assessees admittedly sold to both consumers and other dealers, they were not confined to retail dealings. Rule 26(9) required every wholesale dealer to maintain separate stock accounts, and that obligation applied to the assessees.

Conclusion: The assessees were wholesale dealers and were bound to maintain stock accounts.

Issue (ii): whether non-maintenance of the stock account justified rejection of the accounts and best judgment addition to turnover.

Analysis: The stock account was a corroborative record for verifying the truth and correctness of the other accounts. In its absence, quantitative verification of stocks was not possible, and the assessing authority was entitled to reject the accounts. Once the accounts were rejected on that basis, best judgment assessment could be made, including an addition towards possible suppression. The Tribunal had already reduced the addition on facts.

Conclusion: The rejection of accounts and the resultant best judgment addition were upheld.

Final Conclusion: The order of the Tribunal was not interfered with and the revision failed.

Ratio Decidendi: Where a wholesale dealer fails to maintain the mandatory stock account that is necessary to verify the correctness of the books, the accounts may be rejected and a best judgment assessment, including an addition for possible suppression, can validly follow.

---