2009 (12) TMI 897 - HC - VAT and Sales Tax

Refusal to verify the books of account of the petitioner as requested by the petitioner - Held that - perusal of the order passed by the Tribunal would reveal that the matter was remanded only for the purpose of cross-examination alone, whereas, the entire assessment order was set aside. It means that the assessing authority has to make a fresh assessment by taking into consideration not only the evidence of witnesses but also the books of account. For making any assessment, books of account are necessary and the evidence of witnesses cannot be taken into consideration in isolation by the authorities without considering or taking up the books of account. It should be comprehensive exercise by the authority to make an assessment. As stated in the Division Bench judgment, the best judgment assessment could be only by taking into account the books of account and evidence of witnesses in toto. W.P. allowed

Summary

Issues:
Challenge to the order refusing to verify books of account.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, challenged an order refusing to verify their books of account. The assessments for the years 1999-2000 and 2002-03 were finalized, but a revised assessment was made based on a third party statement. The petitioner approached the Tamil Nadu Taxation Special Tribunal, which quashed the revised assessment and directed the respondent to summon third parties for cross-examination. The respondent issued a notice for cross-examination, and the petitioner requested to produce books of account for verification. However, the respondent rejected this request, stating that the Tribunal's order only mandated cross-examination, not verification of accounts.

Mr. N. Prasad, counsel for the petitioner, argued that assessment should consider all evidence, including books of account, not solely third party statements. He referred to relevant rules and a Division Bench judgment outlining the criteria for best judgment assessment. On the other hand, Mr. J. Ganesan, Government Advocate (Tax), contended that the Tribunal's remand was limited to cross-examination, not verification of accounts. The High Court observed that for a comprehensive assessment, both witness statements and books of account must be considered. Quoting the Division Bench judgment, the Court emphasized that best judgment assessment requires a holistic approach.

Consequently, the Court quashed the authority's order and directed the respondent to check the books of account provided by the petitioner within two weeks. The assessment should consider all documents as required by law. If the authority presents witnesses for cross-examination, it must be completed within two weeks, followed by the assessment. If no further witnesses are offered, the petitioner must submit all books of account within two weeks. The writ petition was allowed with no costs, and the connected application was closed.