1975 (8) TMI 69 - AT - Income Tax

Issues Involved:

1. Revision of assessments under Section 16 of the Tamil Nadu General Sales Tax Act.
2. Original assessments under Section 12 of the Tamil Nadu General Sales Tax Act.
3. Determination of total and taxable turnover.
4. Verification of purchases from fictitious or unverifiable dealers.
5. Exemption claims on second sales.
6. Onus of proof and best judgment assessment.
7. Allocation of first and second sales turnover.

Issue-wise Detailed Analysis:

1. Revision of Assessments under Section 16:

The appeals, except T.A. No. 513/74 and 586/74, were against the revision of assessments under Section 16 by the Assessing Officer (AO). The revisions were based on intelligence reports indicating that certain purchases were from fictitious persons. The AO revised the assessments by rejecting the exemption claims on sales purported to be second sales of iron and steel, determining higher taxable turnovers.

2. Original Assessments under Section 12:

T.A. No. 513/74 and 586/74 pertained to original assessments under Section 12 for the years 1971-72 and 1972-73, respectively. The AO rejected the claims of second sales for certain turnovers due to lack of proof that the goods had suffered single point tax in the state.

3. Determination of Total and Taxable Turnover:

For instance, in T.A. No. 536/74, the AO determined the total and taxable turnover at Rs. 76,09,228.58 and Rs. 6,75,900.00 respectively, against the returned figures of Rs. 74,83,207.03 and Rs. 4,70,046.75. The AO allowed exemptions on a turnover of Rs. 69,33,328.58 as sales other than first sales of iron and steel but later revised these figures based on intelligence reports.

4. Verification of Purchases from Fictitious or Unverifiable Dealers:

The AO relied on intelligence reports and returned registered letters to conclude that certain purchases were from fictitious dealers. For example, purchases from G.S.P. & Company and Mohan Metal Industrial Works were deemed fictitious due to undelivered registered letters and lack of evidence of business existence at the given addresses.

5. Exemption Claims on Second Sales:

The appellants claimed exemptions on the basis that their sales were second sales of iron and steel. However, the AO rejected these claims due to lack of proof that the goods had already suffered single point tax. The Tribunal noted that the appellants had provided affidavits from brokers and purchase lists, but the AO had not sufficiently verified these claims.

6. Onus of Proof and Best Judgment Assessment:

The Tribunal emphasized that the onus of proof for claiming exemptions lies with the appellants under Section 10 of the Act. The Tribunal also highlighted that the AO must use best judgment in determining the turnover of first and second sales, considering the facts and circumstances of each case.

7. Allocation of First and Second Sales Turnover:

The Tribunal followed the precedent set by the Madras High Court in similar cases, allocating the turnover of first and second sales on a 50:50 basis. This allocation was deemed reasonable and fair in the interest of both the Revenue and the appellants.

Conclusion:

The Tribunal allocated the first and second sales turnover in the ratio of 50:50 for the following appeals:

- T.A. No. 536/74: Rs. 2,26,191.15 each for first and second sales.
- T.A. No. 534/74: Rs. 3,51,706.50 each for first and second sales.
- T.A. No. 753/74: Rs. 59,860.00 each for first and second sales.
- T.A. No. 515/74: Rs. 4,56,435.00 each for first and second sales.
- T.A. No. 812/74: Rs. 4,58,530.83 each for first and second sales.
- T.A. No. 475/74: Rs. 23,795.75 each for first and second sales.
- T.A. No. 582/74: Rs. 1,01,480.65 each for first and second sales.

The appeal in T.A. No. 586/74 was dismissed, and the other appeals were partly allowed based on the above allocation.

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