2011 (4) TMI 1239 - HC - VAT and Sales Tax

Summary

Issues involved: Assessment based on inspection, equal time addition, penalty under section 12(3)(b) of Tamil Nadu General Sales Tax Act, appeal before Sales Tax Appellate Tribunal.

Assessment Year 1996-97:
The assessing officer passed a best of judgment assessment on the assessee after an inspection on March 6, 1997. The Appellate Assistant Commissioner deleted the equal time addition due to lack of materials justifying it, especially considering the inspection was at the end of the year. The penalty under section 12(3)(b) of the Tamil Nadu General Sales Tax Act was also cancelled. The Revenue appealed before the Sales Tax Appellate Tribunal.

Sales Tax Appellate Tribunal's Decision:
The Tribunal restored the equal time addition based on the results of an inspection during the subsequent assessment year 1997-98, conducted on February 18, 1999. However, apart from this inspection, there were no other materials to support the equal time addition for the assessment year 1996-97. The first appellate authority rightly cancelled the equal time addition for the lack of justification. The Tribunal's decision to restore the equal time addition solely based on the subsequent year's inspection was deemed insufficient. The materials available should be relevant to the transaction of the assessment year under consideration alone. Therefore, the Tribunal's order restoring the equal time addition and the corresponding penalty were set aside, and the appeal was allowed with no costs.