2010 (1) TMI 1132 - HC - VAT and Sales Tax

Whether the Appellate Tribunal was correct in confirming the assessment relating to undated slip No. 25 which does not involve any sale of goods? Whether the Appellate Tribunal was correct in confirming the equal addition towards probable and not in the revision of assessment? Whether the Appellate Tribunal was correct in confirming the penalty more particularly in a revision of assessment under section 16(2) in relation to surcharge? Held that - The appellate authority and the Tribunal had correctly confirmed the said addition and the learned counsel appearing for the petitioner/assessee is not able to furnish other materials to support his case to take a contrary view of the Tribunal. In such circumstances, the additions made on the basis of slip Nos. 4, 5 and 6 are confirmed and we answer the first question of law in favour of the Revenue and as against the assessee. In respect of equal addition made for probable omission, there is no material available on record for warranting said addition and the assessing officer has not given any reason. The Appellate Assistant Commissioner as well as the Appellate Tribunal have also without assigning any reasons, affirmed the order of the assessing officer. Accordingly, the second question of law is answered in favour of the assessee and as against the Revenue. Taking into consideration the explanation and also the transaction reflected in the books of account, the penalty levied under section 12(3) of the Act is not warranted and the same is deleted. Accordingly, the penalty levied under section 12(3) is deleted and the third question of law is answered in favour of the assessee and as against the Revenue.

Summary

Issues:
1. Assessment of total taxable turnover and penalty under section 12(3) of the TNGST Act.
2. Confirmation of assessment by lower authorities.
3. Validity of addition based on certain slips and penalty under section 12(3) of the Act.

Analysis:
1. The case involved a small-scale industry undertaking supplying various items to Panchayat Unions and Government bodies. The assessment year was 1986-87, with the initial turnover assessed at Rs. 1,90,945. Subsequently, after an inspection, the assessing officer revised the turnover to Rs. 3,76,211, making an addition of Rs. 1,85,266 and imposing a penalty of Rs. 8,244 under section 12(3) of the TNGST Act. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal confirmed the assessment, leading to the appeal being filed before the Taxation Special Tribunal and later transferred to the High Court.

2. The High Court considered substantial questions of law regarding the correctness of the assessment, equal addition, and penalty. The petitioner argued that certain transactions were not related to business and should not have been included in the assessment. However, the assessing officer found discrepancies in credit bills and orders not materialized, leading to the addition of Rs. 92,632 based on valid materials from slips. The Court upheld this addition, as the petitioner failed to provide evidence to the contrary.

3. Regarding the equal addition made for probable omission, the Court found no valid reason or material to support it, leading to its deletion in favor of the assessee. Similarly, the penalty under section 12(3) was deemed unwarranted as there was no evidence of wilful suppression to evade tax. The Court noted the explanation provided by the assessee regarding certain transactions not being business-related, leading to the deletion of the penalty. Consequently, the tax case revision was partly allowed, with costs not awarded.