2013 (11) TMI 613 - HC - VAT and Sales Tax

Discrepancy in books of accounts - Non recording of inter state sales - Held that - in absence of inter-State sale transaction in the books of accounts, no bills were found, no such transactions were found in the books of accounts and yet, they have been found to be carried out in fact. It also further appears that there was a remarkable difference in the stock actually found and the one recorded in the books of accounts. It was further noted that the sale transactions were not tallying with the lorry receipts, sales bills and delivery challans collected by the Department at the time of visit to the residential and business premises of the appellant-assessee, where the numbers were handwritten and were not printed serially. No satisfactory reasons and explanation had come forth when the inquiry was made and that eventually led the authority to conclude that with a view to avoid the payment of tax, there was a suppression all around - when the Commissioner had reason to believe that whole or any part of the taxable turnover of the dealer in respect of the period in question had escaped assessment or had been under assessed, by exercise of powers given under the statute, he determined the amount of tax to the best of his judgment and added 100% of such turnover, within a statutory period of five years as prescribed under the law and, therefore, we find neither any error on facts nor in law giving rise to any substantial question of law for us to indulge in any of these Tax Appeals - Decided against assessee.

Summary

Issues Involved:
1. Burden of proof regarding the existence of alleged transactions.
2. Justification of turnover addition without recording in books of accounts while deleting the penalty.

Detailed Analysis:

1. Burden of Proof Regarding the Existence of Alleged Transactions:
The appellant-assessee contended that the Tribunal erred in holding that the burden to prove the existence of the alleged transactions was not on the department. The court, however, emphasized that all three revenue authorities had concurrently found against the appellant-assessee based on materials collected during the visit to the business and residential premises. The authorities concluded that the appellant-assessee had not maintained the books of accounts properly, revealing a breach of provisions of law, necessitating the employment of the best judgment provision. The court reiterated that unless the appellant-assessee pointed out any perversity going to the root of the matter, the concurrent findings would not be disturbed. The court also referenced Section 35 of the Gujarat Value Added Tax Act, 2003, which allows the Commissioner to determine the amount of tax due from the dealer to the best of his judgment if the turnover has escaped assessment, provided this is done within five years from the end of the relevant year.

2. Justification of Turnover Addition Without Recording in Books of Accounts While Deleting the Penalty:
The appellant-assessee challenged the addition of 100% to the turnover without any basis, arguing that the department did not verify and cross-check the transactions. The court noted that the First Appellate Authority had recorded extensive irregularities and illegalities, including missing inter-State sale transactions in the books of accounts, discrepancies in stock, and non-tallying sale transactions with lorry receipts, sales bills, and delivery challans. The court found that the Commissioner had reason to believe that the taxable turnover had escaped assessment and had determined the tax amount to the best of his judgment within the statutory period. The court held that the addition of 100% to the turnover was not capricious but based on substantive material on record. The court referenced decisions from the Apex Court and this Court, emphasizing that best judgment assessment should be an honest and fair estimate of income, not assessed capriciously, and should have a reasonable nexus to the material available and circumstances of the case.

Conclusion:
The court dismissed all the tax appeals, stating that no substantial question of law was raised. The concurrent findings of the revenue authorities were upheld, and the addition to the turnover was deemed justified based on the materials on record. The court found no error in facts or law and thus saw no reason to interfere with the orders of the First Appellate Authority and the Tribunal. The notice was discharged in each appeal, with no order as to costs.