Zudaida Khatoon Memorial Charitable Society Vs Commissioner Commercial Tax U.P. (Allahabad High Court)
Summary: The Allahabad High Court allowed the revision filed by Zudaida Khatoon Memorial Charitable Society against the order dated 12.03.2020 passed by the Commercial Tax Tribunal, Bench-1, Prayagraj in Second Appeal No. 10 of 2020 for Assessment Year 2014-15. The revision was admitted on 17.06.2020 on questions concerning rejection of books of account despite absence of incriminating material during the survey dated 25.02.2015 and the Tribunal’s justification for determining turnover from sale of Iron & Steel at Rs.1,25,00,000/- and imposing tax of Rs.5 lacs without material evidence.
The revisionist submitted that its business premises had been surveyed on 25.02.2015 at five different places, but no material was seized indicating suppression of purchases or sales. It was submitted that the books of account were maintained on a computer and could not be produced during the survey because the accountant was ill. The revisionist contended that the books were rejected merely because they were not shown at the time of survey and that the consequent turnover enhancement had been made without any material establishing suppression.
It was further submitted that the revisionist was engaged in manufacture and sale of agricultural implements exempted under the UP VAT Act and also manufactured Iron Almirah, Steel Box etc. According to the revisionist, the assessing authority had enhanced turnover by treating purchases of iron and steel as having been sold without being used in manufacture of agricultural implements, although no suppression had been found during the survey.
The learned ACSC supported the impugned order.
The Court, after hearing the parties and perusing the record, noted that the survey conducted on 25.02.2015 covered five different places of the revisionist. The authorities had drawn an adverse inference because the books of account were not shown and had concluded that the volume of sales from the business premises could not be as claimed, leading to the inference that the purchased iron and steel had been sold without disclosure or use in manufacturing agricultural implements.
The Court found that these findings of fact were without basis because no material whatsoever was found during the survey which could lead the authorities to conclude that there had been suppression of purchases or sales. The Court specifically noted that five different places had been surveyed and not a single paper was found which could support the conclusion drawn by the authorities.
The Court held that, in the absence of any adverse material found at the five different places, enhancement and suppression could not be determined by the assessing authority. Merely having the power to reject the books of account, which were not shown at the time of survey, did not justify enhancement of turnover in the absence of supporting material.
Accordingly, the Allahabad High Court set aside the impugned order dated 12.03.2020. The revision was allowed, and the questions of law were answered in favour of the revisionist and against the respondent.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Mr. Murari Mohan Rai, learned counsel for the revisionist and learned ACSC for the respondent.
2. The present revision has been filed against the order dated 12.03.2020 passed by the Commercial Tax Tribunal, Bench-1, Prayagraj in Second Appeal No. 10 of 2020 for Assessment Year 2014-15. The said revision was admitted on 17.06.2020 on the following questions of law:
“A. Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the rejection of account books despite the fact that no incriminating material was found at the time of survey dated 25.02.2015?
B. Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in determining the turnover of sale of Iron & Steel imported and purchased within the State to the extent of Rs.1,25,00,000/- and imposing tax amounting to Rs.5 lacs merely on suspicion and surmises and without any material evidence on record ?”
3. Learned counsel for the revisionist submits that the business premises of the revisionist were surveyed on 25.02.2015 at five different places but no material whatsoever was seized which could led to suppression of purchases or sales of items manufactured and sold by the revisionist but merely the books of account could not be shown at the time of survey, an adverse inference has been drawn. He further submits that books of account were maintained on a computer and on the date of survey, the accountant was ill and, therefore, the books of account could not be shown to the surveying authority. On the said ground, the books of account has been rejected and enhancement has been made. The matter travels up to the Tribunal but could not succeed, hence, the present revision.
4. Learned counsel for the revisionist further submits that the revisionist is engaged in manufacture and sale of agricultural implements, which are exempted under the UP VAT Act. The revisionist also manufactures Iron Almirah, Steel Box etc. Only on the basis of rejection of books of account, the enhancement has been made. He further submits that enhancement has been made without any suppression found at the time of survey. The assessing authority while enhancing the turnover without any basis and material on record has treated the sale of iron and steel as having been effected without being used in the manufacture of agricultural implements.
5. Per contra, learned ACSC supports the impugned order.
6. After hearing the parties, the Court perused the record.
7. The record shows that on 25.02.2015 a survey was conducted at five different places of the revisionist. Adverse inference has been drawn as no books of account has been shown. Further, the surveying authority have come to the conclusion that from the business place of the revisionist, such a volume of sale cannot take place i.e. drawn that the purchase iron steel which were purchased have been sold without disclosing the same or using the same in the manufacture of agricultural implements. These findings of fact recorded are without any basis as no material whatsoever was found, which could have led to the authorities to come to the conclusion that there was any suppress purchase or sale as five different places were surveyed and not a single paper was found, which could led to the conclusion drawn by the authorities. In absence of any adverse material found at five different places, the enhancement and suppression cannot be determined by the assessing authority. Merely having power to reject the books of account, which was not shown at the time of survey, which not led to enhancement of turnover and in absence of any material, the impugned order cannot be sustained.
8. In view of above facts, the impugned order is hereby set aside. The revision is allowed.
9. The questions of law are answered accordingly in favour of the revisionist and against the respondent.
