2024 (10) TMI 796 - HC - VAT / Sales Tax

Levy of Penalty in terms of Section 16(2)(d) of Tamil Nadu General Sales Tax Act, 1959 - sales/purchase suppression - addition on account of purchase suppression towards Aluminium winding wires, freight and Gross Profit - HELD THAT - The trading account, if at all such document existed, ought to have been produced before the authorities at the time of inspection or at least before the assessing officer. No reason has been assigned for such nonproduction at the relevant point in time and neither has the Appellate Assistant Commissioner assigned any reason for permitting the admission of the document, belatedly. There is thus no evidence whatsoever to prove the assessee's argument that the stock relating to the turnover added as suppression of purchase/sales, formed part of the closing stock for the previous period. This argument of the petitioner is rejected and the conclusion of the Tribunal in this regard is confirmed. Two equal time additions towards purchase suppression is unwarranted. The business premises of the petitioner has been subjected to inspection and the authorities had full access to the documents and books of accounts. They were thus in full possession of all particulars to enable a proper quantification of turnover. The books of accounts maintained by the petitioner have been accepted and the assessing authority has not rejected the same. The authority however found some material/evidences indicating purchase suppression and have made additions on this account, which is confirmed. In the absence of any other material/evidence over and above what was found to lead to the addition made to turnover, there is no justification in estimating any further addition. The double equal estimates made amount to pure speculation as they are admittedly not based on any adverse material. The two equal time additions deleted - the additions towards the purchase/sale suppression as well as the penalty sustained - petition disposed off.

Summary

Issues:
Assessment based on purchase suppression, addition towards sales suppression, penalty under Section 16(2)(d) of the Act, admission of additional evidence in the form of a trading account, justification of additions made by the assessing authority, validity of equal time additions towards purchase suppression, and the Tribunal's decision.

Analysis:
The petitioner, a registered dealer under the Tamil Nadu General Sales Tax Act, faced an assessment for the period 2000-2001, which included additions for purchase suppression, sales suppression, and penalty under Section 16(2)(d) of the Act. The first appellate authority allowed the appeal filed by the petitioner, but the revenue challenged this decision before the Tamil Nadu Sales Tax Appellate Tribunal. The Tribunal overturned the first appellate authority's decision, leading to the petitioner producing a trading account as additional evidence to support their claim that the amounts in question were accounted for in the previous assessment period (1999-2000).

The Tribunal found fault with the admission of the additional evidence, stating that it should have been produced during the inspection or before the assessing officer. The High Court agreed with the Tribunal, rejecting the petitioner's argument that the stock related to the turnover additions formed part of the closing stock for the previous period. However, the Court deemed the two equal time additions towards purchase suppression unwarranted, as the authorities had full access to the petitioner's documents and books of accounts during inspection, and no additional material or evidence justified further estimations beyond the initial additions.

As a result, the High Court upheld the additions towards purchase/sales suppression and the penalty but deleted the two equal time additions. The Court emphasized that the additions should be based on concrete evidence rather than speculation. The writ petition was disposed of accordingly, with no costs awarded.