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TMI Blog2018 (9) TMI 1780X X X X Extracts X X X X X X X X Extracts X X X X ..... Engineer, KSEB, Electrical Section, Thuravoor" (sic). The estimation was made on the basis of the details of the electricity consumed and taxable turnover determined; by estimating the turnover probable on consumption of the units of power metered. In first appeal, the First Appellate Authority deleted the estimation made finding that penalty has been imposed merely on technical reason of non-production of books of accounts. A penalty of Rs. 10,000/- was imposed which was confirmed by the Tribunal. The State is in revision from the above order. 2. In O.T. Revision No. 206/2014 the Intelligence Officer inspected the premises of the respondent assessee on 22/10/2007. The business carried on in the premises was not registered and hence an enquiry was made as to the proprietor of the Unit. Based on the information supplied by the employees, notice was issued to one Sulaiman. The said Sulaiman appeared before the Assessing Officer and filed a reply stating that he had not done any business during the year 2007-08. According to him, the business was conducted by M.K. Marakkar. The Intelligence Officer carried out enquiries on his own and found that the Panchayat licence was issued in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 (22) KTR 558 (Ker.). It is also submitted that there could not be any estimation under Section 67 going by the binding precedent in U.K. Monu Timbers. 5. The learned Special Government Pleader (Taxes) would submit that the Division Bench decision in Khadeeja Makkar goes against the accepted principle of estimation being made of turnover on the basis of electrical consumption. It is also pointed out that in the aforesaid case there was a remand made to the Assessing Officer to take proceedings afresh. 6. U.K. Monu Timbers decided on 15/06/2012 categorically held so in Paragraph 10, 11, and 12: 10. In penalty proceedings the offences indicated under Section 67 should be evidenced by the materials recovered on inspection or otherwise and the enquiry is pointedly against any actual suppression or omission in the course of the business transactions, which would lead to the definite conclusion of evasion or attempt to evade. On detection of such offences; in the event of the tax evaded or sought to be evaded being determinable, the officer initiating penalty proceedings is perfectly justified in imposing penalty at the maximum rate of twice the rate of tax actually evaded or sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d definitely have to be done with due notice and after affording a personal hearing. Such estimation should be reasonable and should have a nexus with the gravity and frequency of the commission of offences as also the quantum of loss suffered by the State. This exercise, in our opinion, cannot be undertaken by the officer empowered with the power to impose penalty under Section 67 of the Act. Section 67 contemplates imposition of penalty on proof of commission of offences as a measure of deterrence; best judgment assessments are made to compensate the loss caused to the State. The first question hence is answered against the Revenue and in favour of the assessee. What we have to see is whether there is a different principle laid down by the Division Benches in the various decisions placed before us. 7. Hotel President v. State of Kerala 2012 (48) VST 511 was concerned with the penalty imposed under Section 45A of the KGST Act, 1963. On an inspection conducted in a Bar Hotel it was found from the recovered sale bills that the Gross Profit disclosed in the monthly return was very low. Hence adopting 77.78% Gross Profit, penalty was imposed which was reduced to 50% by the first app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns on its own facts and has not taken a different view in law, from that taken in U.K. Monu Timbers. 9. Hotel Surya v. State of Kerala - S.T. Rev. No. 9/2013 dated 30/05/2016 is again a Gross Profit addition made in a Bar Hotel, on the basis of an inspection carried out by the Intelligence Officer. The learned Senior Government Pleader specifically points out the contention raised by the assessee and the manner in which it is negatived which is as follows: 4. The first contention raised by the learned Senior Counsel for the petitioner is that in a proceedings under Section 45A of the Act, the Officer did not have any power to fix taxable turnover. Though this contention, in principle, seems to be supported by the provisions of the Act and the decisions cited, on facts what we find is that the provisions or the judgments relied on have no relevance..... 5. Further if the contention now raised by the learned Senior Counsel is accepted, that would render Section 45A itself otiose and ineffective. Therefore, we reject the first contention raised by the learned counsel. 10. The contention raised therein was that the Intelligence Officer did not have any power to fix the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxation officer, as has been found in Commissioner of Sales Tax, M.P. v. H.M. Eusafali 1973 KHC 540 : (1973) 2 SCC 137 : AIR 1973 SC 2266 : 1973 (3) SCR 1005 : 1973 (90) ITR 271 : 1973 (32) STC 77 : 1973 Tax LR 2258 : 1973 (2) CTR (SC) 317; by the Hon'ble Supreme Court. There could be no estimation carried out in penalty proceedings and the evasion attempted has to be based on the clear materials or particulars, revealed at an inspection or offence detected otherwise. If the taxable turnover sought to be evaded cannot be clearly determined and quantified going by the provision, there can be only an imposition of penalty of Rs. 10,000/-. However, that would not preclude the Assessing Officer from proceeding for best judgment assessment based on any of these factors relevant to the activity of the dealer; on there being no production of books of accounts or even when there is production; by rejection of the same. In that event, the Assessing Officer could make an estimation which is the power and authority conferred by the Statute for best judgment. 13. Before leaving the matter, we cannot but observe that we come across a number of cases, where the Intelligence Officer's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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