2020 (3) TMI 819 - HC - VAT and Sales Tax

Best Judgement assessment - enhancement of taxable turnover - rejection of books of accounts - Section 8-A of the U.P. Trade Tax Act, 1948 as well as under Section 7(1)(2) of the Central Sales Tax Act - HELD THAT - The Commercial Tax Tribunal, while passing the impugned order has recorded a fact that even previously in the year 1995-96, the books of accounts were rejected and the best judgment assessment was carried out. The findings of the Special Investigation team for the assessment year 1996-97 with regard to the fact that no books of account were found and no manufacturing activity was carried out no explanation for the same was given by the revisionist either before the authorities below of before this Court. The Tribunal has looked into all the aspects of the matter and considered the ground raised by the revisionist and has rightly upheld the rejection of the books of account of the revisionist and the assessment order passed by the Assessing Authority. The tribunal has also considered all the fact that the revisionist was a registered dealer with U.P. Khadi and Gramodyog Board and was supplying goods to Khadi Gramodyog. The findings recorded that the large amount of iron procured which was used in manufacturing was sham and such large quantity of iron could not have been procured which also does not tally with the output of the revisionist and after considering the entire proceedings the Tribunal has rightly upheld the rejection of books of account by the Assessing Authority and the same requires no interference. Revision dismissed.

Summary

Issues:
Challenging order of Commercial Tax Tribunal Bench dated 25.02.2008; Assessment based on report by Special Investigation Branch of Trade Tax Department; Rejection of books of account by Assessing Officer; Enhancement of taxable turnover; Appeal before Deputy Commissioner (Appeals); Appeal before Commercial Tax Tribunal; Allegations of sham business and tax evasion; Upholding rejection of books of account by Tribunal.

Analysis:
The revisionist challenged the order of the Commercial Tax Tribunal Bench dated 25.02.2008, which dismissed their second appeal and allowed the appeal by the revenue, restoring the order of the Assessing Authority. The revisionist, a society registered for manufacturing various products, had their books of account rejected based on a report by the Special Investigation Branch of Trade Tax Department. The taxable turnover was enhanced, leading to a tax assessment. The first appeal before the Deputy Commissioner (Appeals) partially reduced the turnover and tax liability. Both parties then appealed to the Commercial Tax Tribunal, resulting in the impugned order. The Tribunal considered the lack of manufacturing activity, missing books of account, and discrepancies in business transactions. It upheld the rejection of books of account, citing previous instances of similar issues and the mismatch between procurement of raw materials and actual output.

The Assessing Authority concluded that the revisionist conducted a sham business to evade tax, leading to the best judgment assessment. The First Appellate Authority reduced the turnover and tax liability based on the revisionist's submissions. However, the Commercial Tax Tribunal upheld the rejection of books of account, considering the revisionist's registration with U.P. Khadi and Gramodyog Board and discrepancies in iron procurement and production output. The Tribunal found no grounds for interference in the assessment order, leading to the dismissal of the revision.

In the judgment, Hon'ble Alok Mathur, J., considered the arguments presented and reviewed the record, finding no error or infirmity in the Commercial Tax Tribunal's order. Consequently, the revision was dismissed, affirming the Tribunal's decision to uphold the rejection of the revisionist's books of account.