1979 (9) TMI 194 - HC - VAT and Sales Tax

Summary

Issues: Assessment of taxable turnover based on rejection of account books.

Analysis:
The case involves a revision under Section 11(1) of the U.P. Sales Tax Act for the assessment year 1971-72 by a partnership firm dealing in pipes and pipe fittings. The net turnover declared by the assessee was initially &8377;1,19,610.00, which was later increased to &8377;16,00,000.00 by the Sales Tax Officer, then reduced to &8377;12,00,000.00 in appeal, and further reduced to &8377;10,10,000/- by the Revising Authority. The Revising Authority rejected the account books of the assessee based on various grounds, including failure to submit returns, non-production of stock details during surveys, discrepancy in turnover figures, and non-cooperation during surveying. The assessee challenged these reasons before the court through legal representation.

The court analyzed each ground for rejection of the account books presented by the Revising Authority. Firstly, the failure to file a return by the assessee was considered insufficient to justify the rejection of accounts, as it would typically lead to a penalty rather than rejection of books. Secondly, the non-production of stock details was addressed, highlighting that a stock register is not a primary account but an extract from other accounts maintained by the assessee. The court referred to a precedent to support the argument that rejection of accounts solely based on the absence of a stock register is not legally justified.

Regarding the non-production of account books during surveys, the court cited previous judgments where the mere absence of books during surveying did not render the maintained account books unreliable. The court emphasized that non-cooperation during surveys may lead to penalties but does not automatically warrant the rejection of account books. The court noted that in the present case, there was no clear finding of evasion or deliberate non-cooperation with surveying officers.

Ultimately, the court found merit in the assessee's argument and decided to remand the case back to the Revising Authority for a fresh decision, particularly focusing on the discrepancy in turnover figures between the assessment chart and the books. This remand was deemed necessary to ensure a comprehensive reevaluation of the acceptance or rejection of the account books in light of legal precedents and the specific circumstances of the case. The court allowed the revision, set aside the previous order, and referred the matter back to the Revising Authority for a lawful reconsideration without imposing any costs on either party.