2022 (11) TMI 1223 - HC - VAT and Sales Tax

Validity of assessment order - gross non-application of mind - stock variation - reasons to reject the submission/explanation offered and documents submitted by the Petitioner, not given - violation of principles of natural justice - HELD THAT - This Court finds that the order of the 2nd Respondent is liable to be set aside inasmuch as the entire assessment order was made on gross non-application of minds to the Petitioner s objection and despite the Petitioner making a specific reference to the judgment of the Hon'ble Supreme Court in the case of GIRDHARI LAL NANNELAL VERSUS SALES TAX COMMISSIONER, MP 1976 (3) TMI 51 - SUPREME COURT , the 2nd Respondent has passed the assessment order, without even a reference to it. Insofar, as stock variation, the Petitioner's objections, revised returns and documents are rejected by merely stating that it is an after thought and fabricated without furnishing/supplying any reason in support thereof. The impugned order is set aside and the Respondents are directed to re-do the assessment keeping in mind the principles laid down in the case of Girdhari Lal Nannelal and also affording an opportunity to the Petitioner and after taking into account the Petitioner's submission and dealing with the same - Petition disposed off.

Summary

Issues: Challenge to assessment order for Assessment year 2012-2013 based on sales suppression and stock variation.

Analysis:

Issue 1: Sales Suppression
The Petitioner, engaged in sales of consumer products, was assessed for a difference between bank statement and sales turnover, resulting in alleged sales suppression of Rs.3,46,76,640/-. Petitioner contended the difference did not relate to actual sales, but the objection was rejected. The Court noted the assessment lacked proper application of mind, citing the necessity to show money acquisition from taxable transactions, as per the Girdhari Lal Nannelal case. The Court found the Assessing Officer failed to address this legal precedent, indicating a deficiency in the assessment process.

Issue 2: Stock Variation
Another discrepancy highlighted was a stock variation of Rs.60,43,340/-, later revised to Rs.6,660/-. The Respondents dismissed the revised returns as an afterthought without providing substantial reasoning. The Court observed a lack of justification for rejecting the Petitioner's explanations and documents, indicating a failure to consider the evidence presented. The Court emphasized the need for a thorough reassessment, considering the Petitioner's submissions and the legal principles outlined in the Girdhari Lal Nannelal case.

Conclusion:
The High Court set aside the impugned assessment order, directing a reassessment by the Respondents. The Court emphasized the importance of applying legal principles, affording the Petitioner a fair opportunity, and addressing objections in a reasoned manner. The judgment underscores the significance of a meticulous assessment process in tax matters, ensuring compliance with legal standards and procedural fairness.