2017 (10) TMI 1101 - HC - VAT and Sales Tax

Best judgement assessment - Belated filing of returns - whether the impugned orders of assessment making a best of judgment assessment after the returns were filed, were just and proper? - Held that - It is not in dispute that the returns for the relevant assessment years were filed by the learned counsel for the petitioner after the inspection was conducted in the place of business of the petitioner. However, the fact remains that the respondent accepted the belated returns by exercising its powers in levying a composition fee of ₹ 2,000/- for each assessment year in terms of Section 72(1)(b) of the said Act. On such returns being accepted after the levy of composition fee, it goes without saying that such returns, for all the practical purposes, shall be the returns and deemed to have been presented within the time permissible for the relevant assessment year. Whether a best of judgment could have been made? - Held that - there could not have been an estimate of turnover without any material especially when the returns filed by the petitioner, though belatedly, have been accepted by the respondent - the decision in the case of A.Ponnusamy Vs. Government of Madras 1967 (7) TMI 119 - MADRAS HIGH COURT , would be squarely applicable to the facts of the present case, where it was held that it is only any excess sales not covered by the purchases that can be added. The matters are remitted back to the respondent for a fresh consideration - petition allowed by way of remand.

Summary

Issues:
1. Acceptance of belated returns and subsequent assessment.
2. Jurisdiction of Assessing Officer to make best judgment assessment.
3. Validity of estimation of turnover post acceptance of belated returns.
4. Application of legal principles in best judgment assessment.

Issue 1: Acceptance of belated returns and subsequent assessment:
The petitioner, a registered dealer, filed returns for assessment years 2013-14 and 2014-15 belatedly due to the death of the proprietor's brother. The respondent accepted the returns and levied a composition fee. However, proceedings were initiated for disallowing input tax credit and treating turnover of purchases as suppression. The petitioner challenged the assessment order for 2014-15, citing insufficient time for objections. A similar contention was raised for 2013-14, where the Court found 15 days reasonable for objections submission.

Issue 2: Jurisdiction of Assessing Officer for best judgment assessment:
The petitioner argued against a best judgment assessment post-acceptance of belated returns, stating that Assessing Officer lacks jurisdiction to estimate turnover reflected in returns and accounts without wilful non-disclosure. The respondent justified the estimation citing an inspection revealing previously undisclosed turnover, invoking powers under Section 27(1)(a) of the Act for escaped assessments. The Court considered whether the impugned assessment orders post-acceptance of returns were just and proper.

Issue 3: Validity of estimation of turnover post acceptance of belated returns:
The Court referred to a previous case where estimation of turnover based on suppressed purchases and sales was questioned. It was held that only excess sales not covered by purchases could be added. The Court found this legal principle applicable to the present case, emphasizing that estimation without material post-acceptance of belated returns was unjustified.

Issue 4: Application of legal principles in best judgment assessment:
Based on legal precedents, the Court concluded that the assessment orders required interference. The writ petitions were allowed, setting aside the impugned orders and remitting the matters back to the respondent for fresh consideration. The respondent was directed to re-assess in accordance with the law and legal principles discussed in the judgment.

In conclusion, the Court's judgment focused on the acceptance of belated returns, jurisdiction of the Assessing Officer for best judgment assessment, validity of turnover estimation post-acceptance of returns, and the application of legal principles in such assessments. The Court emphasized the importance of following legal principles in assessments and set aside the impugned orders for fresh consideration by the respondent.