2012 (5) TMI 562 - HC - VAT and Sales Tax

Compounding scheme benefit - enhancement of the addition pertaining to the sale rate of the bricks - Held that - As after the death of sole proprietor, his son has availed of the benefit of compounding scheme, where he has shown stock of finished bricks at 30,00,000 and 15,000 raw bricks. But the assessing officer in the absence of the books of accounts enhanced the closing stock for finished and raw bricks. The assessing officer has also estimated the consumption of coal, and burning period by rejecting the books of accounts. The assessing officer has made the addition on estimate basis, which was reduced by the first appellate authority on estimate basis by giving the reasoning in his order. But the Tribunal has enhanced the addition to ₹ 39,225 in the departmental appeal again by estimating the sale but without any reason. Needless to mention that both the lower authorities have given the reasoning for making/reducing the addition on estimate basis but the Tribunal has just repeated the order of the assessing officer and enhanced the addition pertaining to the sale rate of the bricks in the absence of any material, which is not sustainable in the eye of law. The Tribunal has not given any independent finding/reasoning for enhancing the addition where the first appellate authority has given reasoning to reduce the addition. Thus order passed by the Tribunal is not sustainable. So, the impugned order passed by the Tribunal is set aside and the order of the first appellate

Summary

Issues:
1. Revision against Trade Tax Tribunal's order for assessment year 1992-93.
2. Estimation of turnover and tax liability based on surveys and absence of books of accounts.
3. Discrepancies in estimating production of bricks, firing period, and selling rates.
4. Justification of impugned order by lower authorities.
5. Tribunal's enhancement of addition without proper reasoning.

Analysis:
1. The case involved two revisions under section 11 of the U.P. Trade Tax Act, 1948, against the Trade Tax Tribunal's judgment for the assessment year 1992-93.

2. The assessing officer estimated the turnover on an estimate basis due to the absence of books of accounts during surveys, resulting in a tax levy of &8377; 2,34,000. The first appellate authority reduced the turnover to &8377; 4,48,800 and the tax to &8377; 44,880. The Tribunal dismissed the appeal by the assessee and enhanced the addition by &8377; 39,225 without providing proper reasoning.

3. The revisionist's counsel argued discrepancies in estimating brick production, firing period, and selling rates based on factors like location, soil nature, and weather conditions. He cited legal precedents to support his arguments against the assessment.

4. The standing counsel defended the lower authorities' orders, emphasizing the absence of books of accounts during surveys as a basis for the estimating turnover and tax liability.

5. The High Court found that the Tribunal's order lacked proper reasoning for enhancing the addition and merely repeated the assessing officer's decision. In contrast, the first appellate authority had provided reasoning for reducing the addition on an estimate basis. Consequently, the High Court set aside the Tribunal's order, sustaining the first appellate authority's decision in both revisions. The Trade Tax Revision No. 231 of 2004 was dismissed, while Trade Tax Revision No. 230 of 2004 was allowed, granting relief of &8377; 39,225 to the assessee.