2019 (10) TMI 41 - HC - VAT and Sales Tax

Grant of reduction in tax - rejection of books of accounts of revisionist - HELD THAT - Though it is true that the Tribunal has first recorded findings to the effect that the assessee-manager/employee-Mahendra Kumar Pandey had not signed on the survey report and it did not appear to the Tribunal that he had made statement at the time of survey and further no physical verification of the stock was made yet it has also been inferred by the Tribunal that there was vast discrepancy in the disclosed stock of 'chhuwara' being 7,147.38 kgs disclosed in the books and that noted by the survey authority at 10,250 kgs. In that regard, the Tribunal took note of the fact that the number of bags had been counted being 175 - Keeping in mind that and other factors that remained undenied, the Tribunal itself made an estimation of the undisclosed stock of that commodity at 2000 kgs. In the facts of the present case, the Tribunal itself found that there were 2000 ksgs of 'chhuwara' that had not been accounted for. Besides that, there was material in the shape of loose parchas of 'wastage' and 'dibbi' . Therefore, it cannot be said that there was no basis for the estimation made by the Tribunal. Revision dismissed.

Summary

Issues:
Challenges to Trade Tax Tribunal's order on questions of law regarding acceptance of books of account and physical verification during survey.

Analysis:
The revisions were filed against the Trade Tax Tribunal's order granting reduction in tax under the U.P. and Central Acts. The main issues raised were the Tribunal's justification in not accepting the revisionist's appeal and books of account, and the credibility of the survey report conducted on the assessee, a manufacturer and seller of 'meetha pan masala'. The survey revealed discrepancies in stock and absence of manufacturing account books, which the assessee attributed to the survey's timing outside business hours. The assessing authority estimated undisclosed turnover, leading to subsequent reductions by the first appeal authority and the Tribunal.

The Tribunal found discrepancies in disclosed stock of 'chhuwara' and rejected the assessee's explanations regarding 'dibbi' and 'wastage'. Despite lack of physical verification and signing on the survey report by the assessee, the Tribunal estimated undisclosed stock of 'chhuwara' at 2000 kgs, considering factors like bag count. The rejection of books of account was upheld based on existing material, leading to sustained findings supported by law.

Regarding the estimation of stock, the Tribunal's decision was deemed justified as it identified unaccounted 'chhuwara' and had evidence of 'wastage' and 'dibbi'. The Tribunal's estimation was supported by material facts, distinguishing it from cases lacking a basis for estimation. Given the substantial relief already granted by the lower authorities, the Tribunal's decision was upheld, and interference was deemed unnecessary. Consequently, the questions of law were answered in favor of the revenue and against the assessee, leading to the dismissal of the revisions.