1993 (8) TMI 289 - HC - VAT and Sales Tax

Summary

Issues: Assessment of turnover for the year 1985-86, rejection of accounts by assessing authority, ad hoc addition to cover possible suppressions, validity of penalties imposed, quantum of estimate in best judgment assessment.

In this judgment delivered by the Kerala High Court, the revisions were connected matters filed by the same assessee, a dealer under the Kerala General Sales Tax Act, 1963, for the assessment year 1985-86. The assessing authority rejected the accounts and returns of the assessee due to discrepancies noted during an inspection by the Intelligence Squad. The penalties imposed for irregularities were reduced in revision. The Deputy Commissioner (Appeals) upheld the rejection of accounts but reduced the ad hoc addition to the taxable turnover. Both the assessee and the Revenue appealed this decision before the Sales Tax Appellate Tribunal, which affirmed the rejection of accounts and reinstated the 10% addition to the returned turnover. The assessee challenged this decision in the revisions before the High Court.

The High Court considered the arguments presented by the revision petitioner's counsel and found that the rejection of accounts was justified based on the discrepancies in stock noted during the inspection. The Appellate Tribunal's decision to sustain the rejection of accounts was deemed valid as it was a question of fact, and no error of law was found in this conclusion. The Court emphasized that the Appellate Tribunal acted as the final fact-finding authority in this matter.

Regarding the ad hoc addition made by the assessing authority to cover possible suppressions, the High Court noted that once the accounts were rejected, the estimate to be added was at the discretion of the assessing authority. The Appellate Tribunal found the first appellate authority's reasoning to reduce the addition to be erroneous, as the stock variation covered a significant period of the assessment year. The Tribunal reinstated the 10% addition, considering the nature of the business, stock disparity, and locality of the assessee's business. The Court upheld the Tribunal's decision, stating that the quantum of addition in a best judgment assessment is a question of fact, and the Tribunal's restoration of the assessing authority's estimate was reasonable and without error of law.

In conclusion, the High Court found no merit in the revisions and dismissed them, upholding the decision of the Sales Tax Appellate Tribunal.