1991 (6) TMI 240 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of enhancing the gross turnover by 25%
2. Allegation of suppressing purchase of goods

Analysis:

Issue 1: Validity of enhancing the gross turnover by 25%
The case involved the assessment of an assessee dealing in food-stuffs, where inspecting officers found excess stock of wheat and gram during physical verification. The assessing officer enhanced the gross turnover by 50% due to doubts regarding the genuineness of purchase vouchers. On appeal, the appellate authority and the Tribunal upheld the enhancement, albeit reducing it to 25%. The High Court analyzed the basis for the enhancement and found that there was no nexus between the available materials and the 25% increase. The Court emphasized the need for a rational basis for enhancement in best judgment assessment. It was noted that the majority members of the Tribunal considered the value of suppression and its frequency, but the Chairman disagreed, stating there was no evidence of frequent undisclosed transactions. Consequently, the Court deemed the 25% enhancement arbitrary and would have found 12.5% more reasonable. The Court answered the first question in favor of the assessee.

Issue 2: Allegation of suppressing purchase of goods
The second question revolved around whether the assessee had suppressed the purchase of wheat and gram. The Tribunal had found in favor of the assessing officer, concluding that the assessee had indeed suppressed the purchases. The High Court reiterated the principle that findings on pure facts by the Tribunal should not be disturbed unless there is no evidence to support them or they are perverse. The Court found that there was evidence before the Tribunal to support the suppression finding, as the Assistant Commissioner had valid reasons for not crediting the way-bill produced by the assessee. The Court distinguished the present case from a Supreme Court decision where reliance on untested statements was questioned. The Court highlighted that the burden was on the assessee to disprove the investigating officer's findings, which was not done. Consequently, the Court answered the second question against the assessee.

In conclusion, the High Court addressed the issues of enhancement of turnover and alleged suppression of purchases, ultimately ruling in favor of the assessee on the first question but against them on the second question. The reference was answered accordingly, with both judges concurring on the decision.