2014 (9) TMI 920 - HC - VAT and Sales Tax

Rejection of books of accounts - Best judgment assessment - Held that - In the impugned order passed in Second Appeal No. 45/2014, the Tribunal has neither considered anything nor examined the facts of the case and the grounds raised in the memorandum of appeal. The Tribunal dismissed the appeal merely observing that it is not a case where only difference in stock has been found but adverse material has also been found which has been affirmed by the first Appellate Authority and there is no error in the order of the first Appellate Authority. The Tribunal has not stated that which other adverse material was found and how he agreed with the findings recorded by the first Appellate Authority. - Tribunal has failed to examine the facts of the case and to record own finding of fact on the issues raised before it and as such the impugned order cannot be sustained - Decided in favour of assessee.

Summary

Issues:
Assessment based on best judgment - Discrepancies in stock and absence of books of account - Appeal challenging assessment order - Tribunal's dismissal of appeal without proper examination of facts and grounds.

Analysis:
The case involves an assessment for the Assessment Year 2011-12 where a survey revealed discrepancies in stock and absence of books of account at the business premises of the assessee. The assessing authority issued a show cause notice regarding these issues, leading to a best judgment assessment and a demand of &8377;2,04,217. The assessee's explanation was deemed unsatisfactory, resulting in the assessment order dated 31st December, 2012.

The applicant filed a first appeal challenging the assessment order, which was partially allowed, reducing the tax liability by &8377;71,960. The first appellate authority noted a difference in the purchase lists submitted for different periods, specifically referencing an entry regarding a purchase from M/s Suraj Agencies. However, the genuineness of the tax invoice and the tax rate applicability were not verified by the first appellate authority.

Subsequently, in the Second Appeal No. 45/2014, the Tribunal dismissed the appeal without a thorough examination of the facts and grounds raised. The Tribunal's decision was based on the presence of adverse material besides the stock differences, aligning with the findings of the first Appellate Authority. However, the Tribunal did not specify the nature of the adverse material or elaborate on its agreement with the first Appellate Authority's findings.

The High Court, in its judgment, critiqued the Tribunal for its failure to analyze the case's facts and reach independent conclusions. Consequently, the High Court allowed the revision, setting aside the Tribunal's order and remanding the Second Appeal back to the Tribunal for a fresh decision. The directive emphasized the need for a comprehensive review of all facts, circumstances, and evidence without being influenced by previous observations.