2016 (10) TMI 1009 - HC - VAT and Sales Tax

Survey - Non accounted stock - Evasion of tax - Penalty - Held that -On analysing the statements, it clearly proves that a reasonable chance of hearing was given by the AO to the assessee to explain the unrecorded/unaccounted stock found of 90 cartons Pack Chain (Zip) but the assessee gave statement on oath which has been analysed. There is no occasion to say that these statements were given under pressure or on account of coercion. Mere saying is not sufficient that too before the Appellate Authorities - If the assessee had to retract/resile with the so-called statements recorded at the time of survey on oath, the assessee ought to have informed the higher officials by an affidavit or/and other acceptable evidence about coercion/pressure tactics having been inflicted on the assessee at the time of survey - Decided against the assessee.

Summary

Issues Involved:

1. Legitimacy of the additional evidence considered by the Tax Board.
2. Validity of the penalty imposed by the Assessing Officer (AO).
3. Allegations of coercion and pressure during the survey.
4. Compliance with procedural rules during the survey.
5. Applicability of precedents cited by both parties.

Detailed Analysis:

1. Legitimacy of the Additional Evidence Considered by the Tax Board:

The Tax Board's decision to delete the penalty was based on the consideration of additional evidence, such as purchase bills and vouchers, which were not produced before the AO during the survey. The court noted that the Appellate Authorities should not have accepted such additional evidence without confronting it to the AO. The additional evidence had a material bearing on the case and considering it without giving the AO a chance to offer comments was deemed improper.

2. Validity of the Penalty Imposed by the AO:

The penalty of ?1,30,500/- was imposed by the AO after finding 90 cartons of Pack Chain (Zip) unaccounted for in the respondent's books during a survey. The respondent admitted on the spot that these goods were purchased without bills and were not recorded in the books with the intention of evading tax. The court upheld the penalty, stating that the AO's decision was just and proper, and the Tax Board's deletion of the penalty was incorrect.

3. Allegations of Coercion and Pressure During the Survey:

The respondent claimed that the statements given during the survey were made under pressure and coercion. However, the court found no evidence to support these claims. The statements were recorded in the presence of two independent witnesses, and the respondent did not retract or resile from these statements before higher officials or through an affidavit. The court concluded that mere allegations of coercion were insufficient without substantial proof.

4. Compliance with Procedural Rules During the Survey:

The court noted that the survey was conducted in compliance with procedural rules. The statements were recorded in the presence of two independent witnesses, whose names and addresses were documented. The stock verification and the respondent's statements were properly recorded and analyzed. The court dismissed the respondent's contention that there was a violation of Rule 50.

5. Applicability of Precedents Cited by Both Parties:

The court examined various precedents cited by both parties. It found that the judgment in ACTO v. B.C. & Company was applicable to the instant case, supporting the Revenue's position. The court distinguished other judgments cited by the respondent, such as CTO, Anti Evasion, Udaipur v. M/s. Tulsilal Manila Swarankar and M/s. Diamond Marketing Agency, Jaipur v. A.C.T.O., based on factual differences. The court emphasized that the findings in the instant case were based on clear evidence and proper procedure.

Conclusion:

The court concluded that the Tax Board's order suffered from infirmity and reversed it. The penalty imposed by the AO and upheld by the Dy. Commissioner (Appeals) was deemed appropriate and justified. The petition succeeded, reinstating the penalty against the respondent.