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TMI Blog2009 (3) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... vant materials. Therefore set aside the orders of the Tribunal and that of the first appellate authority and remand the matter back to the assessing officer for giving opportunity to produce the books including the seized records if released to the assessee and to make fresh assessment based on the above observations. However, since the assessee has closed the business and since the Department has not filed second appeal against the orders of the first appellate authority we give an option to the assessee to accept the first appellate authority's order and on the assessee's acceptance the assessing officer shall complete the assessment by making an addition equal to the turnover in terms of the first appellate authority's order. - 158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,01,200 for 2003-04 and Rs. 2,98,763 for 2004-05. The respondent-assessee however made application under section 47 and offered to compound the offence for non-maintenance of books of accounts and for non-payment of tax dues and the request for compounding was accepted by the Department. The respondent accordingly remitted Rs. 1,02,200 for 2002-03 and Rs. 2 lakhs each for the assessment years 2003-04 and 2004-05. The respondent thereby avoided prosecution and penalty. The proceedings of compounding under section 47 by the intelligence officer produced in this court are dated January 31, 2005. The respondentassessee however applied for registration under the KGST Act only on August 14, 2006. Even though it is stated that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and make his own estimate for finding whether the turnover disclosed by the assessee is acceptable. The contention raised is that, compounding under section 47 is different from the assessment process and findings in compounding proceedings as such will not bind the assessing officer. However the contention of the counsel for the assessee is that entire records were seized from the respondent's residence and two business premises of the assessee and based on the seized records the intelligence officer has arrived at certain conclusions and since seized records are the only materials based on which the assessment is made, the assessing officer is bound to follow the findings of the intelligence officer. The further contention raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether seized books of account relate to the entire transactions. The argument raised can be accepted only if it is established that the seized records cover the entire transactions of the assessee and if they do not disclose full business transactions then the turnover has to be estimated based on available materials. On going through the proceedings of the intelligence officer dated January 31, 2005 we find that the following are the items seized from the residence: In addition to the recoveries of the above items from the residence of the assessee the Department has traced the following records from the business premises IX/457: It is seen that he has made his own estimates of purchase and sales and estimated the tax evaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,98,763. For both these years the assessee was permitted to compound the offence and to avoid the prosecution and penalty on payment of Rs. 2 lakhs each. The estimation of tax evasion by the intelligence officer in the compounding application is not for the purpose of assessment but for the purpose of collecting, compounding fee. When the tax sought be evaded is found to be more than the compounding fee, then there is no necessity for the intelligence officer to exactly estimate the actual amount of tax that was evaded by the dealer. In fact it is for the assessing officer to assess the exact tax that is payable by the dealer. Therefore we are of the view that the proceedings in the course of compounding will not bind the assessing offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's acceptance the assessing officer shall complete the assessment by making an addition equal to the turnover in terms of the first appellate authority's order. Yet another issue raised in addition to the estimation of turnover is assessee's liability for purchase tax under section 5A on the value of the diamonds and other precious stones sold in studded ornaments. Diamonds and precious stones are high value items which are separately billed when studded jewellery is sold. If the assessee has done this, there is no scope for levy of tax under section 5A on the stones and diamonds purchased because the commodity suffers tax at sale point under section 5(1). This is a matter for verification by the assessing authority in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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