Conford, Kolovsky and Carton. The opinion of the court was delivered by Conford, P.J.A.D.
This appeal involves the correctness of a determination of the Division of Tax Appeals reducing this taxpayer's gross personal property valuation of business inventories for the tax year 1967 from $258,536 to $170,000 and the corresponding assessment thereof from $30,378 to $18,330.
The original assessment was in conformity with a return duly filed by the company with the municipal assessor. The corporation was later taken over by the Glen Alden Corporation, and a Mr. Barch, a representative of that organization, testified before the Division that a mistake had been made in the preparation of the original return. Although his testimony was not very clear, examination thereof in the light of
the schedule attached to the return appears to lend substance to the claim of mistake: the schedule purports to show how the disclosed average inventory of $258,536 during the pertinent inventory valuation year -- 1965 -- was arrived at.
In the foregoing regard, it should first be noted that raw material inventory is exempt. N.J.S.A. 54:4-11 (as amended by L. 1964, c. 141, § 3). The original schedule arrived at the aforesaid figure of $258,536 in purported accordance with the "Average Inventories -- Percentage of Gross Profits" method. It listed four quarterly 1965 figures in the column for "Gross Quarterly Inventory", totaling $1,215,812. It deducted therefrom a figure for raw materials of $181,688 not indicated to be a total of any corresponding quarterly figures for raw materials, thereby arriving at a remainder of $1,034,144. This sum was divided by 4 to produce an average for the year of $258,536 as representing inventories other than raw materials. Barch testified that the $181,688 figure represented only the year-end raw material inventory; that the correct initial quarterly figure was $80,000, and that the average inventory for raw material throughout the year was $130,000.
In effect, the argument of the taxpayer was that the latter figure should be multiplied by 4, to correspond with the method of determining Gross Quarterly Inventory as shown on the original return, and thereby avoid a distorting result. This would yield $520,000, which, when deducted from the gross inventory aggregate shown above, would give a remainder of $680,000 instead of the $1,034,144 shown on the return. Dividing the $680,000 by 4 produces the alleged true average taxable inventory of $170,000 claimed by the taxpayer and allowed by the Division.
While we understand the taxpayer's argument we are not satisfied that proper or adequate supporting proofs were adduced or satisfactory findings of fact made by the Division. Barch had no connection with the Texlite Company during 1965, when the inventories in question accrued, and, in the absence of an explanation not apparent on this record, could
have had no personal knowledge thereof. He offered no company records or other data to substantiate his assertions that $181,688 was only a year-end figure for raw materials, or $130,000 the average thereof throughout the year. The testimony was purely conclusional and the source not indicated. Better proof was required to overcome the probative effect of the company's own original return.
The finding by the Division judge was merely that "it was quite obvious" that the "office personnel" had made errors in the tax return, without stating what those errors were, or making any other findings explanatory of the Division's final judgment. The findings were inadequate. See Jas. M. McCunn & Co., Inc. v. Fleming & McCaig, Inc. , 81 N.J. Super. 97, 105 (App. Div. 1963).
For the foregoing reasons the Texlite matter must be remanded for rehearing at which the taxpayer will be required to adduce competent and satisfactory proofs establishing its claim of mistake in the original return and the Division to ...