2017 (10) TMI 1 - HC - VAT and Sales Tax

Revision of assessment - omission to include the stock of gold in the return - KVAT - Held that - revision of assessment pertaining to the period of which the assessee was carrying on the business on the strength of the registration granted to him, was permissible in law. Penalty - it was alleged that the learned single Judge has erroneously reduced the penalty imposed to ₹ 1 lakh - Held that - levy of penalty should always be proportionate to the gravity of the offence committed by the assessee - Insofar as this case is concerned, though at a belated stage, the assessee himself has confessed his mistake and sought an opportunity to revise his return, though such revision could not have been allowed, still taking into account such conduct of the assessee, we feel that the learned single Judge was justified in taking the view that the penalty of double the amount of tax imposed, viz. ₹ 23,61,076/- was too disproportionate. Therefore, we do not find any reason to interfere with that relief granted by the learned single Judge also. Validity of order of assessment - Held that - the omission in question had occurred in April, 2014. The Assessing Officer had issued notice calling upon the assessee to produce the books of accounts on 24.08.2015. The date specified for appearance was 08.09.2015. It is still thereafter that on 14.10.2015, the assessee made request for revision of their returns. In such a situation, when the request was rejected and assessment is completed, we cannot say that the Assessing Officer has committed an illegality in completing the assessment. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Assessment and penalty proceedings against a proprietorship for failure to declare stock of gold.
2. Assessment and penalty proceedings against a partnership firm for failure to declare stock of gold.

Analysis:
1. The appeals arose from a judgment regarding assessment and penalty proceedings against a proprietorship for not declaring stock of gold. The proprietorship had obtained registration under the KVAT Act to start a gold jewelry business but failed to declare the gold stock in the return for December 2013. The registration was later canceled, and the assessee informed the Assessing Officer about the omission. The Assessing Officer issued notices for assessment and penalty, leading to the filing of a writ petition seeking to quash the proceedings. The single Judge allowed the petition, permitting the revision of the return and directing a reassessment based on the revised return.

2. Another issue involved assessment and penalty proceedings against a partnership firm for not declaring the stock of gold brought into the business as capital. The firm also failed to indicate the gold stock in its return for April 2014. The Assessing Officer issued notices for production of books, and upon disclosure of the omission by the firm, penalty notices were issued. The single Judge upheld the assessment order but reduced the penalty amount. The State challenged this decision, while the assessee filed an appeal against the assessment order being upheld.

3. The State contended that allowing the revision of the proprietorship's return after registration cancellation was illegal. However, the court found that the revision was permissible as the assessee had informed the Assessing Officer about the discrepancy before the notices were issued. The reduction of the penalty amount for the partnership firm was justified considering the belated confession and request for revision made by the assessee.

4. The court held that penalties should be proportionate to the offense committed, and in this case, the reduction was appropriate considering the circumstances. The appeals were dismissed as the court found no merit in the challenges raised by both the State and the assessee regarding the assessment and penalty proceedings against the proprietorship and partnership firm.