2022 (11) TMI 286 - HC - VAT and Sales Tax

Validity of assessment order - enhancement of gross turnover - petitioner contended that Assessing Officer, by merely taking into consideration one or the other figures from books of account of the petitioner, have alleged concealment of sales without any evidence - HELD THAT - It is an admitted fact that the Assessing Officer has accepted the books of account of the petitioner and, in the Assessment Order, no adverse evidence has been recorded demonstrating concealment of sale. However, the Assessing Officer, by comparing the Statement of Sales as reflected in the books of account (Annexure-5 at page 61) with the Consumption account (at Page 45) treated the difference of the amount of Rs. 10,46,08,885.86 (-) Rs. 9,63,41,597 Rs. 82,67,288.86 as the concealed sale turnover of iron ore. From the Tax Audited Report submitted to Income Tax Department (Annexure-4), it would be evident that cost of goods sold was clearly reflected as Rs. 10,46,08,886/-, whereas, from the Sales Statement, it was evident that said goods were sold at Rs. 9,63,41,597/-. Thus, the differential amount was not the concealed sales amount of the petitioner, but was the loss suffered by the petitioner on sale of iron ore, which is evident from the books of account of the petitioner itself. The Assessing Officer, on one hand, treated the loss suffered by petitioner as concealed sale amount of iron ore, and, on the other hand, by comparing the gross profit shown in books of account of the petitioner, and, by stating, inter alia, that gross profit has been shown less by the exact amount of Rs. 82,67,288/-, proceeded to levy tax again on the said amount by treating it as concealed sale. It appears that the Assessing Officer has completely misconceived itself while passing Assessment Order, as, on one hand, the loss suffered on sale of sponge iron was treated as concealed sale amount, and, on the other hand, exact sale figure was treated to be the concealed sale amount of sponge iron by stating, inter alia, that petitioner has shown less gross profit in the books of account. The order passed by Revisional Authority dated 07.03.2017, Appellate order and Assessment Order including consequential Demand Notice dated 02.02.2011are, hereby, quashed and set aside - matter is remanded to the Assessing Officer to pass de novo Assessment Order after giving opportunity of hearing to the petitioner and further to enable the petitioner to explain the figures mentioned in its books of account. Petition allowed by way of remand.

Summary

Issues:
Challenging order enhancing turnover and tax levy based on alleged concealed sales.

Analysis:
1. Enhancement of Turnover: The petitioner challenged the order enhancing the turnover based on the Assessment Order for the year 2008-09. The Assessing Officer increased the petitioner's turnover by Rs. 1,65,34,577.72 due to alleged concealment of sales. The petitioner argued that the difference in figures for iron ore sales in the consumption account and sales statement represented a loss, not concealed sales. The petitioner contended that the Assessing Officer's decision was arbitrary and lacked evidence of actual concealment.

2. Appeals and Revision: The petitioner's appeal before the Joint Commissioner of Commercial Taxes and subsequent revision application before the Commercial Taxes Tribunal were both dismissed. The petitioner argued that the authorities did not consider their explanation regarding the difference in figures for iron ore sales, leading to an incorrect determination of concealed sales and subsequent tax levy.

3. Legal Arguments: The petitioner's counsel highlighted that the Assessing Officer's decision was based on conjectures and lacked concrete evidence of concealed sales. The petitioner's books of account clearly showed separate figures for cost of goods sold and sale prices. The petitioner emphasized that the difference in figures was due to a loss on iron ore sales, not concealed sales. Legal precedents were cited to support the argument that the burden of proving concealed sales rests with the Assessing Officer.

4. Judicial Findings: The High Court examined the Assessment Order, Appellate Order, and the Tribunal's decision. It noted that the Assessing Officer had accepted the petitioner's books of account without adverse evidence of concealment. The Court found that the difference in figures for iron ore sales was a loss suffered by the petitioner, not concealed sales. The Assessing Officer's treatment of this as concealed sales and subsequent tax levy was deemed erroneous.

5. Court Decision: The High Court quashed and set aside the orders of the Revisional Authority, Appellate Authority, and the Assessment Order. The matter was remanded to the Assessing Officer for a fresh assessment, allowing the petitioner an opportunity to explain the figures in their books of account. The Court emphasized that determining concealed sales solely based on books of account without concrete evidence is impermissible in law.

This detailed analysis of the judgment highlights the key issues, legal arguments, judicial findings, and the ultimate decision of the High Court in the case.