2012 (2) TMI 450 - HC - VAT and Sales Tax

Whether the estimation made for possible suppression on mere surmises is not fair and reasonable in the absence of any suppression of turnover? Held that - In respect of the addition, there is factual finding given by the authorities below that the assessee had failed to maintain correct accounts and also had purchased groundnut kernel from undisclosed sources and found excess on the date of the inspection. So, addition of ₹ 3,43,400 was made based upon valid material. Even with regard to levy of tax on a turnover of ₹ 2,37,856 was based on valid material. It was also found that there was excess of stock of oil-cakes found by the officers of the enforcement wing. The assessee also unable to give any other material to take a contrary view. Therefore, the order passed by the Tribunal in respect of the addition made based on valid materials and hence, the same is confirmed. After going through the order, we also feel that equal addition is unwarranted. It is only based on estimate that too probable suppression. It is only a guesswork. There is no material for making equal amount for probable suppression. Therefore, we confirm the order in respect of addition made by the Tribunal. However, equal addition for probable omission alone is deleted. Question of law raised is answered partly in favour of the assessee.

Summary

Issues:
1. Levy of purchase tax on excess stock of groundnut kernel
2. Validity of estimation for possible suppression of turnover

Levy of Purchase Tax on Excess Stock of Groundnut Kernel:
The case involved a dealer in oil, oil-cakes, groundnut, etc., declaring taxable turnover in monthly returns for the assessment year 1994-95. During an inspection, stock variation and defects in business transactions were found, leading to the assessing officer determining a higher taxable turnover. The officer made additions for stock variation of groundnut and kernel, treating it as a first sale. The Appellate Assistant Commissioner set aside some additions but confirmed others. The Sales Tax Appellate Tribunal upheld the additions, prompting the assessee to file a revision. The court noted the factual findings of incorrect accounts and excess stock, justifying the additions made by the authorities. The order was confirmed regarding the additions based on valid material.

Validity of Estimation for Possible Suppression of Turnover:
The main contention was the equal addition made for probable suppression of turnover, which the assessee argued lacked justification and was based on mere estimation. The court agreed that the equal addition for probable omission had no basis and was unwarranted, being solely a guesswork without supporting material. Consequently, the court confirmed the order regarding the additions made by the Tribunal but deleted the equal addition for probable omission. The tax case revision was partly allowed, with the second question of law answered partly in favor of the assessee, and no costs were awarded.