1983 (2) TMI 263 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Rejection of Books of Account
2. Validity of Survey Findings
3. Assessment of Taxable Turnover
4. Adequacy of Tribunal's Relief

Detailed Analysis:

1. Rejection of Books of Account:
The primary issue was whether the books of account could be rejected solely based on the absence of entries for transactions found in loose papers during a survey. The Court observed that the purpose of a survey is to check the credibility of the accounts maintained by a dealer. The absence of entries must be considered in the context of the totality of circumstances, including the time of the survey and when the transactions occurred.

The Court referred to previous cases such as *Bishambar Singh v. Commissioner of Sales Tax*, where it was held that the absence of entries could not lead to the rejection of books if the dealer was not required to maintain a record. However, this view was not accepted by the Supreme Court, which emphasized the necessity of making entries for transactions.

2. Validity of Survey Findings:
The Court noted that the assessing authority found that the dealer's explanation for the absence of entries was not credible. The Court emphasized that the absence of entries at the time of the survey could indicate an intention to suppress transactions, especially if the transactions occurred earlier in the day and were not recorded by the time of the survey.

The Court discussed various precedents, including *Commissioner of Sales Tax v. Murli Dhar Shyam Saran* and *Tarang Radio Company v. Commissioner of Sales Tax*, where the absence of entries led to the rejection of accounts. The Court concluded that no inflexible rule could be laid down, and each case must be decided based on its specific circumstances.

3. Assessment of Taxable Turnover:
The assessing authority rejected the books of account and determined the taxable turnover by the best of judgment, adding significant amounts to the taxable purchases and sales. The dealer's appeals to the Assistant Commissioner and the Sales Tax Tribunal resulted in some reductions but did not secure acceptance of the accounts.

The Court found that the assessing authority had cogent reasons for not accepting the dealer's explanation, noting that even the subsequently made entries did not contain the full record of transactions. The Tribunal's decision to confine the enhancement to specific amounts was deemed reasonable.

4. Adequacy of Tribunal's Relief:
The dealer argued that the Tribunal's relief was inadequate. However, the Court held that the Tribunal had provided adequate relief considering the circumstances. The estimate of turnover made by the Tribunal was found to be reasonable and free from manifest error.

Conclusion:
The revision was dismissed, with the Court finding no justification to interfere with the Tribunal's decision. The rejection of the dealer's books of account and the assessment of taxable turnover were upheld, and no order as to costs was made.