2019 (10) TMI 44 - HC - VAT and Sales Tax

Suppression of sales and purchases - Whether a Weighment Slip alone can become the evidence of sale specifically when the same contains only the weight? - HELD THAT - In absence of any prior enquiry made by the assessing officer from Sri Bankey Bihari Dharamkanta, Moradabad Road, the weighment slip register of that person recovered from the assesee could not be attributed to the assessee in absence of any other evidence to establish that the transactions found recorded in such register belonged only to the assessee. Whether mere installation of Generator at the business premises can authorize the authorities to levy tax on the presumed purchase of Diesel specifically when there is nothing on record which may indicate that the production activity has ever been carried out by the Generator? - Whether in absence of any evidence of sale of Reta the liability of tax can be fixed specifically when record reveals the applicant is not involved in the trading of Reta? - HELD THAT - No addition could have been made on undisclosed purchase of diesel and undisclosed sale of sand in absence of any material, whatsoever. The matter is remitted to the assessing authority to pass appropriate order after affording due opportunity of hearing to the assessee - Revision allowed in part.

Summary

Issues:
Assessment of undisclosed turnover based on survey material, Weighment slip as evidence of sale, Tax liability on presumed purchase of diesel, Liability of tax in absence of evidence of sale.

Analysis:
1. The revisionist, an assessee engaged in the manufacture and sale of stone products, challenged the Commercial Tax Tribunal's order enhancing the disputed tax liability based on a survey conducted at the business premises. The Tribunal dismissed the revisionist's appeal and partly allowed the revenue's appeal, resulting in an increased tax liability by ?1,51,000.

2. The survey revealed various stock positions and seized documents, including a weighment slip book from another entity, Sri Bankey Bihari Dharamkanta. The assessing officer estimated undisclosed turnovers based on this material, attributing transactions to the assessee without verifying the connection. The first appeal authority reduced some estimations, which the Tribunal affirmed but further increased the tax liability.

3. The revision raised questions of law regarding the weighment slip's evidentiary value, tax on presumed diesel purchase, and tax liability without evidence of certain sales. The revisionist argued that the weighment slip register's connection to their business was not established, and no evidence supported the additional tax estimations.

4. The opposing counsel contended that the weighment slip register found at the assessee's premises warranted attribution of transactions recorded therein to the assessee, placing the burden of proof on the revisionist.

5. The High Court found the rejection of the assessee's books of accounts justified due to the survey's circumstances but criticized the revenue's failure to inquire about the weighment slip's ownership. The Court deemed the tax estimations unfounded and lacking evidentiary support, setting aside the Tribunal's order and remitting the matter for reassessment.

6. The Court answered the questions of law by emphasizing the necessity of verifying document ownership and establishing evidence for tax estimations, ultimately allowing the revision in part and directing a reassessment by the assessing authority after affording the assessee a proper hearing.