2014 (2) TMI 300 - HC - VAT and Sales Tax

Rejection of books of accounts - Discrepancy in books of accounts and actual stock - First appellate authority deleted adjudication based on estimation and reduced penalty amount - Joint Commissioner set aside that order and uphold original adjudication - Held that - a perusal of the order reveal that while upholding the actual suppression, the First Appellate Authority pointed out that the slips recovered during the inspection and the entries in the slips did not contain specific dates of the transaction and therefore, it could be construed for the whole period and not for any particular period, thus, giving benefit of doubt, the further addition was cancelled; on the aspect of stock discrepancy too, the First Appellate Authority cancelled the addition. The Joint Commissioner, while revising the order had not stated any specific period for the slip to fix it with any particular year for consideration; except for the view expressed to disagree with the findings of the Appellate Assistant Commissioner - here are no grounds shown to uphold the order of the Joint Commissioner and there are no grounds for sustaining further addition by way of estimation - Therefore, we set aside the order of the Joint Commissioner and restore the order of the Appellate Assistant Commissioner - Decided in favour of assessee.

Summary

Issues:
Assessment of actual suppression of stock, addition on estimated sales, penalty under Section 12(3)(b)(v) of the Tamil Nadu General Sales Tax Act, revision by Joint Commissioner, validity of order by First Appellate Authority, grounds for sustaining further addition by way of estimation.

Analysis:

1. Assessment of Actual Suppression of Stock:
The case involved an assessee who was a registered dealer in Stainless Steel wares. During an inspection, differences between actual stock and book stock were found. The Assessing Officer made additions for actual suppression and estimated sales of stainless steel vessels and scraps. The First Appellate Authority confirmed the actual suppression but deleted the addition on estimation. The High Court upheld the actual suppression but disagreed with the Joint Commissioner's decision to restore the assessment and penalty, ultimately setting aside the Joint Commissioner's order and restoring the First Appellate Authority's decision.

2. Penalty under Section 12(3)(b)(v) of the Tamil Nadu General Sales Tax Act:
The Assessing Officer levied a penalty under Section 12(3)(b)(v) of the Tamil Nadu General Sales Tax Act based on the recovered materials. The First Appellate Authority reduced the penalty to match the actual suppression. The Joint Commissioner, in a suo motu revision, restored the penalty. The High Court found that the Joint Commissioner failed to provide grounds to uphold the penalty and, therefore, set aside the order and reinstated the First Appellate Authority's decision.

3. Revision by Joint Commissioner:
The order of the First Appellate Authority, which reduced the penalty and cancelled the addition on estimation, was revised by the Joint Commissioner. The High Court noted that the Joint Commissioner did not specify any particular period for the recovered slips, leading to disagreement with the findings of the Appellate Assistant Commissioner. The High Court agreed with the assessee that there were no grounds to sustain the further addition by way of estimation, ultimately setting aside the Joint Commissioner's order.

4. Validity of Order by First Appellate Authority:
The First Appellate Authority confirmed the actual suppression but deleted the addition on estimation, reducing the penalty accordingly. The High Court found that the First Appellate Authority's decision to cancel the further addition on slips and stock discrepancy was valid, leading to the restoration of the First Appellate Authority's order.

In conclusion, the High Court allowed the Tax Case (Appeal) by setting aside the Joint Commissioner's order and restoring the decision of the First Appellate Authority.