1977 (3) TMI 139 - HC - VAT and Sales Tax

Summary

Issues:
Whether the remand order to the appellate authority was justified based on the disproportion between turnover and stocks in the assessee's account books.

Analysis:
The judgment of the Court pertained to three references under section 11(1) of the U. P. Sales Tax Act, all involving the same assessee and relating to different years - 1969-70, 1970-71, and 1971-72. The central question in all three references was the justification of a remand order to the appellate authority concerning the rejection of the assessee's account books due to disproportionate turnover in relation to stocks held. The Sales Tax Officer rejected the account books primarily on this ground, which was upheld by the Assistant Commissioner (Appeals) leading to a remand of the cases for further inquiries. The Judge (Revisions) found the directions given by the Assistant Commissioner vague and set aside the appellate orders, directing clearer instructions for the Sales Tax Officer. Reference to a previous court decision highlighted that disproportionate turnover alone is not sufficient grounds for rejecting account books without concrete evidence of understatement. The Assistant Commissioner's understanding that new grounds could be sought for rejection was deemed unsustainable. Consequently, the Court found the remand order by the Judge (Revisions) unjustified.

The Court emphasized that the mere disproportion between turnover and stocks is not a valid reason for rejecting account books without concrete evidence of understatement. The Assistant Commissioner's decision to remand the cases for the Sales Tax Officer to seek additional grounds for rejection was deemed unsustainable. The Court held that if the original grounds for rejection were not valid, seeking new grounds was unwarranted. The judgment highlighted the importance of concrete evidence before rejecting account books based on turnover discrepancies alone. The Court's decision favored the assessee, concluding that the remand order to the appellate authority was not justified. The assessee was awarded costs from the revenue along with an Advocate's fee.

Overall, the judgment provided a detailed analysis of the issues surrounding the rejection of account books based on disproportionate turnover and the subsequent remand orders. It clarified the legal standard required for rejecting account books and emphasized the need for concrete evidence of understatement before such action can be justified.