2019 (11) TMI 825 - HC - VAT and Sales Tax

Estimation of turnover and tax - Whether the facts and circumstances of the case the tribunal was right in deciding the second appeal of the applicant in summary manner being the court of last fact finding authority, without considering the reply to the show cause notice and the memorandum of second appeal? HELD THAT - The Tribunal, as the last fact finding authority, ought to have given serious consideration and it ought to have recorded its own findings of fact, upon consideration of grounds pressed. It further appears that there cannot be any dispute to the rule being relied upon by the learned counsel for the assessee. In the facts of the present case, it is seen that, it remained undisputed that two bill books had been found from the premises of the assessee during the survey dated 29.8.2005 wherein transaction of purchase and sale of raw materials and finished goods were found recorded. Those remained from being reconciled by the assessee from its regular books of accounts. The total number of pages on which such transaction have been found recorded were in excess of fifty and period for which they related was also in excess of a few months. Present is clearly a case where adverse material found during the survey brought to light substantial undisclosed purchase and sale of goods. Therefore, there can be no challenge to the rejection of books of accounts of the assessee. Revision dismissed.

Summary

Issues:
1. Revision against the order of the Commercial Tax Tribunal, Allahabad
2. Estimation of turnover and tax for A.Y. 2005-06
3. Question of law regarding the decision of the tribunal in summary manner

Analysis:
1. The revision was filed against the order of the Commercial Tax Tribunal, which confirmed the estimation of turnover and tax made by the assessing officer for the assessment year 2005-06. The Tribunal dismissed the appeal filed by the assessee, leading to the present revision.

2. The assessment in question was for the second year of the assessee's business. The assessing authority rejected the books of accounts of the assessee and estimated the turnover of sale at a higher amount based on a survey conducted, leading to a significant difference in the tax liability. The first appeal authority upheld the rejection of books of accounts but reduced the estimation. The Tribunal affirmed the findings of the first appeal authority.

3. The question of law raised in the revision pertained to whether the tribunal was right in deciding the second appeal in a summary manner without considering the reply to the show cause notice and the memorandum of the second appeal. The High Court observed that the Tribunal's order lacked specific reasoning and detailed findings, indicating room for improvement. However, considering the substantial undisclosed transactions found during the survey, the rejection of books of accounts was deemed justified.

4. The High Court acknowledged that the Tribunal should have given more serious consideration to the grounds pressed by the assessee, as per established legal principles. Despite the rushed nature of the Tribunal's decision, substantial relief was granted to the assessee in terms of reduced tax liability. Ultimately, in light of the facts of the case, the revision was dismissed, leaving the question of law open for future consideration in an appropriate case.