2020 (4) TMI 672 - HC - VAT and Sales Tax

Best Judgement Assessment - rejection of books of accounts - whether the authorities were justified in rejecting the account books of the assessee for assessment year 2008-09 on the basis of survey report dated 28/07/09 and 04/08/09 is not pertain to the above assessment period and to pass the best judgement assessment? - HELD THAT - In the instant case, it seems that the books of accounts were tallied and there is no mention of any deficiency in the books of accounts, but they have been rejected solely on the ground that the same were not found in the premises during the survey. The tribunal has also not considered any other reason for accepting the rejection of books of accounts which, in my opinion, is based on apprehension, rather than due consideration of the facts of the present case. It is also borne from the record that for the financial year 2008-09 tax invoice No. 467 dated 05.02.2009 relating to 63.225 metric tons of Coal was found where the coal was sold at the rate of ₹ 3750/- per MT. It has also been observed that during the same period other traders have sold coal at the rate of ₹ 6200/-per MT while the brick kiln is at the Ghaziabad and appellants have purchased coal for ₹ 5800/- to ₹ 6400/-. The Tribunal has not given any independent finding for accepting the order of the assessing officer in rejecting the books of accounts, but has only said that the same has also been upheld by the First Appellate Authority and no interference is required without taking into consideration the grounds taken by the assessee. It was the duty of the Tribunal, which is the final fact finding authority, to have considered the grounds raised by the assessee and to have returned a finding after considering the same - Though the Tribunal has recorded that the books of accounts were duly presented when the show cause notice was given to the assessee, and no discrepancy was found in the same, but non-presentation of the books of accounts at the time of survey cannot be the sole reason for rejection of the books of accounts. The matter is remanded to it for fresh adjudication expeditiously, say within a period of six months from the date a certified copy of this order - matter allowed by way of remand.

Summary

Issues:
1. Rejection of account books for the assessment year 2008-09 based on a survey report.

Detailed Analysis:

Issue 1: Rejection of account books for the assessment year 2008-09 based on a survey report

The case involves the rejection of account books of the assessee for the assessment year 2008-09 based on a survey report conducted on 28.07.2009 and 04.08.2009. The assessee, engaged in the purchase and sale of coal, claimed that coal was purchased from outside the State and mostly sold to Brick Kiln owners. The assessing authority rejected the books of accounts and assessed the assessee based on a survey report. The First Appellate Authority partially allowed the appeal, deleting the turnover in respect of alleged purchases from unregistered dealers but maintained the rejection of books of accounts. The Commercial Tax Tribunal upheld the rejection of books of accounts, considering the absence of books during the survey and the inability to verify the stock found on the premises. The Tribunal also addressed the dispute regarding the average selling rate of coal, emphasizing the lack of evidence regarding freight charges paid by purchasers. The Tribunal's decision was based on the premise that the assessee might be involved in trade with unregistered dealers to evade tax.

The assessee contended that the absence of books during the survey should not lead to the rejection of accounts, as the books were maintained and audited by chartered accountants. The assessing authority's order indicated that the books were produced during the show cause notice, and no tax evasion was found. However, the Tribunal upheld the rejection of books, citing concerns about possible tampering due to their absence during the survey. The Tribunal's decision seemed to rely on the absence of books during the survey rather than any discrepancies found within the accounts. The Tribunal's failure to provide independent findings for rejecting the books, without considering the grounds raised by the assessee, led to the conclusion that a fresh adjudication was necessary.

In conclusion, the High Court set aside the Tribunal's order and remanded the matter for fresh adjudication within six months, emphasizing the need for a more thorough consideration of the grounds raised by the assessee regarding the rejection of account books during the assessment year 2008-09.