2024 (1) TMI 1299 - HC - VAT and Sales Tax

Rejection of appeal - rejection of books of accounts - best judgement assessment - HELD THAT - Admittedly, an adverse inference has been drawn against the revisionist due to survey dated 23.12.2008 in which 14 loose papers were found as well as variation in the stocks, on the said basis, the assessing authority while framing the assessment order has rejected the books of accounts and made a best judgment against the revisionist against which first appeal was preferred which was partly allowed as 12 loose papers out of 14 loose papers got tallied only two papers, i.e. 13 14, an adverse inference was drawn against the revisionist granting partial relief, against which second appeal was filed by both the revisionist as well as by the respondent. Further, an adverse inference has been drawn against the revisionist with regard to Parcha Nos. 13 14 as well as variation of stocks, which could not properly been explained even before the appellate authority while rejecting the appeal. Once, the finding of fact with regard to variation of stocks has not been challenged which was also basis for rejecting the books of accounts and make the best judgment assessment, therefore impugned order cannot said to be bad in the eye of law. The present revision fails and is dismissed accordingly.

Summary

Issues:
Assessment based on survey findings, Adverse inference drawn against revisionist, Challenge to impugned order, Explanation for variation in stocks, Invoices discrepancy, Evasion of tax, Finding of facts not challenged, Best judgment assessment upheld.

Analysis:
The judgment pertains to a revisionist challenging an order passed by the Commercial Tax Tribunal, Lucknow, regarding the assessment for the year 2008-09. The revisionist, engaged in trading, faced adverse inferences following a survey where discrepancies were found. The revisionist's counsel argued that the books of accounts were maintained digitally, and the invoices were raised after goods were returned, thus justifying the discrepancies. Additionally, it was claimed that the invoices in question were issued to another entity due to an error on their part, absolving the revisionist of any wrongdoing. On the contrary, the Standing Counsel alleged that the revisionist manipulated invoices to evade taxes, presenting a modus operandi to support the claim.

The Court reviewed the records and acknowledged the adverse inferences drawn against the revisionist based on the survey findings and stock variations. The assessing authority had rejected the books of accounts and made a best judgment assessment, partially allowing the first appeal. However, the adverse inferences related to specific invoices and stock discrepancies remained unresolved. The tribunal's findings, not contested in the revision, were crucial in upholding the assessment based on the unchallenged facts.

Ultimately, the Court found no grounds for interference in the impugned order, as the revisionist failed to challenge the critical findings of stock variations and invoice discrepancies. Consequently, the revision was dismissed, affirming the best judgment assessment and answering the legal questions against the revisionist. The judgment highlights the importance of challenging factual findings and providing substantial explanations in tax assessment disputes to avoid adverse inferences and uphold the legality of the assessment process.