2019 (7) TMI 192 - HC - VAT and Sales Tax

Rejection of books of accounts to make Best Judgement assessment - running of Brick Klin - estimation of firing period - HELD THAT - In the first place, the conclusion drawn by the authorities as to rejection of books of account cannot be seriously disputed in the present case, as the assessee did not produce the books of account. Though he may have made an application for compounding, however upon rejection of that application for the purpose of making a regular assessment, the books would remain a requirement to be fulfilled by the assessee. In absence of those books, the authorities have not erred in rejecting the same and in consequentially proceeding to make the best judgment assessment. Quantification of the turnover - HELD THAT - In the first place, some elbow room has to be allowed to the revenue authorities while making estimation and no rule of exact measurement can be enforced against the assessing authority in this regard. In so far as the estimation is based on a valid and relevant consideration, the same does not call for any further or microscopic examination. In the facts of the present case, keeping in mind the admitted facts of the survey dated 06.05.2001 wherein the substantial amount of under production bricks and coal were found existing and also it was noted that the brick kiln was running, it is difficult to accept the submission advanced on behalf of the assessee that the brick kiln would have stopped running on 10 May, 2001, keeping in mind the general tendency of the industry - the estimation of the firing period made by the Tribunal is found to be based on relevant consideration - the same cannot be faulted. Revision dismissed.

Summary

Issues:
Assessee's revision against Trade Tax Tribunal's order for A.Y. 2001-02 - Dispute over taxable turnover period and estimation - Assessment based on survey reports - Challenge before first appellate authority - Appeal to Tribunal - Selling rate enhancement - Books of account rejection - Best judgment assessment.

Detailed Analysis:

1. Dispute over Taxable Turnover Period:
The dispute revolved around the period from 01.04.2001 to 30.09.2001, with the assessee claiming production for only 18 days, while the Assessing Officer estimated 91 days based on survey reports. The first appellate authority reduced the firing period to 56 days and adjusted the selling rate. The Tribunal further enhanced the selling rate, leading to the current revision.

2. Books of Account Rejection and Best Judgment Assessment:
The Assessing Officer rejected the assessee's claim due to the absence of books of account during the survey, leading to a best judgment assessment. The rejection was upheld as the assessee failed to produce complete books, despite compounding benefits in previous periods. The authorities were justified in rejecting the books and proceeding with the assessment.

3. Estimation of Turnover and Selling Rate:
The estimation of turnover involves some guesswork, allowing revenue authorities leeway. The Tribunal's estimation of the firing period at 56 days was based on relevant considerations, including the industry tendency and survey findings. Similarly, the selling rate enhancement to ?1,210 was deemed fair without evidence for a concession, as upheld by the Tribunal's factual finding.

4. Conclusion and Judgment:
The High Court dismissed the revision, affirming in favor of the assessee on all questions. The rejection of books of account and consequent best judgment assessment were deemed valid. The estimation of turnover and selling rate by the Tribunal was found reasonable based on industry practices and survey evidence. The Tribunal's decision was upheld, emphasizing the lack of merit in the revision.

In summary, the High Court upheld the Tribunal's decision regarding the estimation of turnover and selling rate, dismissing the revision and ruling in favor of the assessee on all issues raised.