1975 (11) TMI 74 - AT - VAT and Sales Tax

Summary

Issues:
Assessment of Orissa Sales Tax for the years 1969-70, 1970-71, and 1971-72 - Rejection of purchase accounts - Addition of profit to purchase figures - Calculation of Gross Turnover (GTO) - Margin of profit for retailers - Timeliness of filing second appeals.

Analysis:

The appeals before the Appellate Tribunal ITAT Orissa pertain to the assessment of Orissa Sales Tax for the years 1969-70, 1970-71, and 1971-72. The appellant, a retailer in grocery and allied articles, faced issues with the rejection of purchase accounts and the addition of profit to purchase figures by the Assessing Officer (AO). The AO added 25% to the purchase figures as profit due to unvouched local purchases, leading to additional demand notes for each year. The first appellate Court upheld the rejection of purchase accounts, citing lack of vouchers and supporting entries for purchases, and justified the profit addition and turnover estimation methods used by the AO.

The appellant contended that the inspection leading to the rejection of accounts occurred after the close of the relevant years, making the findings inadmissible. Additionally, the appellant argued against the 25% profit addition and the 15% profit margin adopted for calculating Gross Turnover (GTO). The Addl. S.R. supported the rejection of accounts due to the absence of sale accounts, and justified the profit addition and margin for retailers.

The Tribunal considered whether the accounts should be rejected, given the absence of sale accounts and reliance solely on purchase figures. It found the rejection unjustified, as subsequent evidence from an inspection could not be used to reject accounts for previous years. The Tribunal directed the GTO calculation based on admitted purchases and added a 15% profit margin, aligning with the industry practice for retailers. Consequently, the appeals were partially allowed, with the GTO to be redetermined, taxes recomputed, and excess tax refunded if applicable.

Regarding the timeliness of filing second appeals, the Tribunal condoned an 18-day delay due to the appellant's father's illness, accepting the appeals as filed within the stipulated time frame. The Tribunal recognized the exceptional circumstances and deemed sending the matter back for further orders unnecessary, ensuring a just resolution in light of the circumstances presented.