2011 (4) TMI 1251 - HC - VAT and Sales Tax

Present revision has been filed under section 11 of the U.P. Trade Tax Act, 1948 against the order dated December 19, 2006 passed by the Trade Tax Tribunal, Lucknow Held that - In the instant case, there is no finding by the Tribunal that the assesse failed to show the cash book at the time of survey with mala fide intention. On these facts, the Tribunal was in error in affirming the finding of the authority below rejecting the books only on the ground that the cash book could not be shown at the time of survey. Therefore, I hold that the books version of the assessee on the facts and circumstances of the case should have been accepted. Hence, I direct the assessing officer to accept the books of account maintained by the assesse and make de novo assessment accordingly. For the purpose, all the orders passed by the authorities below as well as the Tribunal are set aside. Revision allowed.

Summary

Issues:
1. Revision filed under section 11 of the U.P. Trade Tax Act, 1948 against the order of the Trade Tax Tribunal.
2. Rejection of books of account during assessment year 2002-03 based on estimate basis.
3. Discrepancies in stock noted during survey and subsequent rejection of account books.
4. Legal principles regarding rejection of account books in absence of physical verification.
5. Adverse inference against assessee in case of mala fide intentions during survey.

Analysis:

1. The revision was filed against the Trade Tax Tribunal's order for the assessment year 2002-03. The petitioner, a proprietor firm dealing with rice and rice bran, faced issues when the assessing officer rejected their books of account during a survey due to the absence of the proprietor and accountant on-site.

2. The petitioner's counsel argued that the books of account were not available during the survey as neither the proprietor nor the accountant was present. The survey team did not physically weigh the stock, leading to discrepancies. The counsel highlighted the maintenance of day-to-day manufacturing accounts and the separate levy rice register, emphasizing the legitimacy of the recorded stocks.

3. The High Court analyzed legal precedents, such as the cases of Ashoka Enterprises and Devi Lal & Sons, to determine the validity of rejecting account books solely based on their unavailability during a survey. The Court noted that rejection should only occur if mala fide intentions are proven, which was not the case here.

4. Consequently, the Court held that the assessing officer should have accepted the assessee's books of account considering the circumstances. The Court directed a de novo assessment based on the accepted books, setting aside all previous orders by the lower authorities and the Tribunal.

5. In conclusion, the revision was allowed in favor of the petitioner, emphasizing the importance of valid reasons for rejecting account books and the need for proper assessment based on accepted records.