2019 (7) TMI 1126 - HC - VAT and Sales Tax

Rejection of books of accounts - estimation of the turn over made by the assessing authority - Job-Work - HELD THAT - On the issue of job work, learned counsel for the assessee has submitted, neither the assessing authority nor the Tribunal have recorded any cogent finding of fact based on any material found existing on record but have merely recorded those findings on surmises and conjectures. The transaction being of job work, there was no prescribed book of account required to be maintained by the assessee. However, full details of job work transactions were available in the shape of challans of inward and outward movement of the goods. There were also vouchers prepared by the assessee. All of them were produced before the assessing authority. However, the assessing authority has completely ignored the same and rejected the claim of job work without any basis. On a perusal of the orders passed by the three authorities, the submissions advanced by both counsel appear to be correct, inasmuch as none of the authorities has applied its mind as to the claim of job work made by the assessee. While the assessing authority and the Tribunal had rejected the claim of the assessee, the first appellate authority has accepted the claim without recording any specific reasons. Revision disposed off.

Summary

Issues:
1. Rejection of books of accounts and estimation of turnover by assessing authority.
2. Discrepancy in sales transactions and job work transactions.
3. Validity of rejection of books of accounts based on unaccounted bills.
4. Quantification of concealed turnover and assessment of job work transactions.

Analysis:

Issue 1: Rejection of books of accounts and estimation of turnover
The revisions arose from a common order of the Trade Tax Tribunal partly allowing the revenue's appeal and dismissing the assessee's appeal. The Tribunal largely affirmed the rejection of books of accounts and estimation of turnover by the assessing authority. The Court noted that the rejection of books was based on due consideration of material and evidence, establishing that certain bills were not recorded in the regular books of accounts, justifying the rejection.

Issue 2: Discrepancy in sales transactions and job work transactions
The assessee challenged the rejection of books by arguing that discrepancies in sales to a specific dealer were unreal and non-existent. The purchasing dealer issued Form 3B, supporting the sales claimed by the assessee. However, the authorities erred in considering part of the form unrelated to the assessment year. The Court observed that specific bills were not recorded in the books, and the opportunity was granted to the assessee to address the allegations, concluding that the rejection was justified.

Issue 3: Validity of rejection based on unaccounted bills
The rejection of books was also challenged on the grounds that disputed bills were not confronted to the assessee for rebuttal. The Court found that certain bills were neither cancelled nor recorded in the books, and the assessee had the opportunity to address the allegations. The rejection was upheld based on the non-recording of specific bills in the regular books of accounts.

Issue 4: Quantification of concealed turnover and assessment of job work transactions
Regarding the quantification of concealed turnover and assessment of job work transactions, the Court noted discrepancies in the assessing authority's findings. The matter was remitted to the first appellate authority to reconsider the quantification of best judgment assessment, particularly focusing on unaccounted bills and verifying if the assessee engaged in job work transactions. The Court emphasized the need for a thorough assessment based on existing evidence within a specified timeframe.

In conclusion, the Court disposed of the revision, directing a reevaluation of the quantification of concealed turnover and job work transactions, ensuring a fair and evidence-based assessment within a stipulated period.