1974 (4) TMI 81 - HC - VAT and Sales Tax

Summary

Issues:
- Alleged deliberate concealment of turnover and furnishing of wrong particulars in the tax return for the assessment year 1970-71.
- Jurisdiction of the Sales Tax Officer to impose penalty under section 15-A of the U.P. Sales Tax Act.

Analysis:
The judgment by the High Court of Allahabad pertains to a petition filed under Article 226 of the Constitution challenging a notice issued by the Sales Tax Officer, Shahjahanpur Circle, to show cause why penalty under section 15-A of the U.P. Sales Tax Act should not be imposed. The petitioner, a partnership firm dealing in iron, steel, cement, and iron goods, was alleged to have deliberately concealed turnover and furnished wrong particulars in its tax return for the assessment year 1970-71. The Sales Tax Officer rejected the petitioner's books and made a best judgment assessment, resulting in a higher taxable turnover than declared by the petitioner. The impugned notice was issued based on this discrepancy, invoking section 15-A of the Act which allows for penalties in case of concealment or furnishing of inaccurate particulars of turnover.

The petitioner contended that the rejection of its books and the subsequent best judgment assessment did not automatically imply concealment or deliberate furnishing of wrong particulars. The Sales Tax Officer, in response, argued that the rejection of books was the basis for suspecting inaccurate particulars or concealment. The Court emphasized that the rejection of books and a higher assessment did not conclusively prove deliberate concealment or furnishing of wrong particulars. It held that the burden of proving the turnover declared by the assessee was wrong rested with the department. The Court noted that in this case, no specific particulars were provided to the petitioner to explain the discrepancies, solely relying on the rejection of books for the assessment.

Ultimately, the Court found that there was insufficient material for the Sales Tax Officer to believe that the petitioner had concealed turnover or furnished inaccurate particulars. As a result, the Court quashed the notice dated September 4, 1973, and allowed the writ petition with costs. The judgment highlighted the importance of providing specific details to the assessee when alleging discrepancies and emphasized that rejection of books alone does not establish deliberate concealment or furnishing of wrong particulars. The Sales Tax Officer was advised to reinitiate proceedings if supported by proper material and in accordance with the law.