1968 (7) TMI 57 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the findings of the Tribunal that the petitioner's books of accounts and the turnover returned are incorrect and incomplete, warrant rejection.
2. Whether there is material to support the estimated addition of Rs. 1,00,000 to the purchase turnover.

Issue-wise Detailed Analysis:

1. Rejection of Books of Accounts:
The petitioner, a private limited company engaged in purchasing, processing, and selling prawns and lobsters, had its books of accounts rejected by the Sales Tax Officer for the year 1964-65. The rejection was based on the alleged suppression of purchases, evidenced by missing way-bills F-208 and F-210, which were not accounted for in the petitioner's records. The Tribunal upheld the rejection but reduced the turnover enhancement from 40% to Rs. 1,00,000.

The petitioner argued that the entries for the purchases covered by the way-bills were included in the books under the name of P.K. Aziz, Cochin. The Tribunal, however, found the petitioner's explanation unsatisfactory and confirmed the rejection of accounts due to the non-accounting of the specific consignments and the non-production of several way-bill duplicates.

The Court noted that the Sales Tax Officer's rejection was primarily based on the non-accounting of the consignments transported as per F-208 and F-210, not on the non-production of way-bill duplicates. The Tribunal's reliance on the petitioner's inability to disprove the Sales Tax Officer's findings was misplaced. The Tribunal should have appraised the materials on record independently rather than expecting the petitioner to disprove the findings.

2. Material to Support Estimated Addition:
The Court examined the merits of the case, noting that the petitioner's accounts were audited by a reputed firm and accepted by both the sales tax and income tax departments in previous and subsequent years. The petitioner's business primarily involved exporting goods, making tax evasion through suppression of purchases unlikely.

The Sales Tax Officer's method of determining the turnover by adding 40% to the disclosed purchases based on the value of goods in way-bills F-208 and F-210 was criticized for lacking judgment. This method assumed a consistent suppression rate throughout the year without concrete evidence.

The Tribunal's addition of Rs. 1,00,000 to the turnover was based on a comparison with turnovers from previous years, without providing specific figures or considering the petitioner's explanation. The Court found no material to support this addition, concluding that the Tribunal's decision lacked proper basis.

Conclusion:
The Court allowed the revision petition, ruling in favor of the petitioner on both issues. The rejection of accounts was unwarranted, and there was no material to justify the estimated addition to the turnover. The Court emphasized the need for judicial considerations in the quasi-judicial function of assessing officers and highlighted the importance of proper reasoning and evidence in rejecting business accounts. The petition was allowed with costs, and counsel's fee was fixed at Rs. 200.