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TMI Blog1980 (9) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... oor Weaving Factory, Amritsar, and M/s. Laxmi Trading Company, Amritsar, in respect of five transactions of sale aggregating to Rs. 2,80,531 in favour of M/s. Kapoor Weaving Factory, Amritsar, and one sale transaction in the sum of Rs. 1,11,159 to M/s. Laxmi Trading Company, Amritsar. Both these firms were holding valid registration certificates for the relevant assessment year. The Assessing Authority came to the conclusion that these sales amounting to Rs. 4,01,690 had not in fact been made in favour of these two registered dealers. As a consequence of this finding, the Assessing Authority added this amount in the taxable quantum of the dealer. Feeling dissatisfied against the order passed by the Assessing Authority, the assessee filed an appeal before the Deputy Excise and Taxation Commissioner (Appeals), Jullundur, who dismissed the same on 19th November, 1970. The second appeal filed by the assessee before the Sales Tax Tribunal was also dismissed on 16th September, 1972. While dismissing the appeals, the Tribunal observed as under: "The fact that two alleged purchasing dealers stood registered at the relevant time is not in dispute. The appellant also furnished declaratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee; (3) that the Assessing Authority acted on material, which was not legal, to come to the conclusion that the sales were fictitious; (4) that the finding of the Assessing Authority was contradictory in terms; if sales were fictitious, in other words, no goods had been sold, there was no question of adding them to the taxable turnover of the assessee, but if the goods had been sold, then the mere fact that the registered dealer had stopped its business would be no ground to penalise the assessee when the sales hold been made in accordance with the rules. The assessee had complied with the provisions of law while selling the goods to the registered dealer after receiving from it form S.T. XXII and, therefore, the liability, if any, had to fall on the purchasing dealer. If the purchasing dealer had closed its business, it was for the department to cancel its registration certificate or not to issue form S.T. XXII." In Devinder Kumar Kewal Kumar v. State[1972] 30 S.T.C. 352., the same position of law was reiterated. The court, however, enumerated the following five heads of evidence noticed by the Tribunal in the statement of the case: "(i) According to the Assessing Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash payment. This factor made the genuineness of the sale transactions as also of the declarations questionable. A person who had no means could not make purchases running into lakhs on cash payments. The inference was drawn that either these were bogus transactions, there being no purchaser at all or the real purchasers were some other persons and the signatures on the declarations were from the alleged purchasers on payment of some remuneration which became a source of their livelihood and beyond this they had no interest or connection with these transactions. (v) The Assessing Authority allowed deductions of the aggregate amount of Rs. 6,07,575-11-3. The remaining claim amounting to Rs. 11,94,624-14-3 was disallowed. None of the concerns mentioned was traced and the opportunity offered to the petitioner by the Assessing Authority to produce or summon them through process of law was refused on the plea that their whereabouts were not known. At the time of hearing of the revision petition before (sic) the counsel for the State to summon the above seven dealers but that too was declined on the same plea. The learned counsel for the petitioner stated before the Financial Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate of registration as being intended for resale by him or for use by him in the manufacture of any goods for sale, etc.' These observations were rather borrowed by the learned Judge from a decision of the Calcutta High Court in Sriniwas Jiwanram v. State of West Bengal[1952] 3 S.T.C. 301. A seller in the Sriniwas' case(2) was held not to be responsible for the movement of a purchaser. Nor was it considered to be his responsibility to trace him (purchaser). These considerations have been held to be wholly irrelevant and not germane to the issue, namely, whether the transactions are proved to be genuine. An argument was advanced in the Ram Pal's case(1) that the purchasers were men of straw and this was a good piece of evidence, but the contention was repelled. In an overall assessment, we are satisfied that the present case is on all fours with the cases cited above and we must hold that there was no evidence on which the Assessing Authority or the appellate authority, acting under the Act, could find that the transactions in respect of which deduction was sought by the assessee were proved to be collusive and not genuine." In the instant case, however, the Assessing Authority d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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