Allahabad High Court
M/S A.G. Sales vs The Commissioner Commercial ... on 22 July, 2022
Bench: Saumitra Dayal Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD
?Court No. - 38
Case :- SALES/TRADE TAX REVISION No. - 361 of 2014
Revisionist :- M/S A.G. Sales
Opposite Party :- The Commissioner Commercial Taxes
Counsel for Revisionist :- Shubham Agrawal
Counsel for Opposite Party :- C.S.C.
Hon'ble Saumitra Dayal Singh,J.
1. Heard Shri Shubham Agrawal, learned counsel for the assessee and learned Standing Counsel.
2. Present revision has been filed by the assessee against the order of the Commercial Tax Tribunal, Moradabad Bench, Moradabad, dated 7.2.2014 in Second Appeal No. 358 of 2013 for A.Y. 2011-12 (U.P.). By that order, the Tribunal had partly allowed the assessee's appeal and reduced the total tax Rs. 6,28,529/- against estimated turnover Rs. 94,65,287/-.
3. Revision was admitted on three questions of law. However, at present, it has been pressed on the following question of law (as framed in the order dated 15.5.2014):
"Whether the Tribunal was justified in affirming the rejection of account books of the applicant on the basis of less stock found in the survey than the stock actually recorded in the trading account by the applicant, which is in teeth of the law declared by this Hon'ble Court in a catena of judgments?"
4. Having heard learned counsel for the parties and having perused the record, it is seen, for the earlier A.Y.s - 2008-09, 2009-10 and 2010-11, the assessee had been admitted to the benefits of compounding scheme under U.P. Value Added Tax Act. It is also a fact that the assessee had applied for compounding for the A.Y. 2011-12, on 28.4.2011. That application was pending. In the meanwhile, nine days before the festival Diwali, on 18.10.2011, a survey was conducted at the petitioner's business premises. Therein, according to the stock trading account, stock of raw material valued at Rs. 3,25,760/- was found. Against that, according to the surveying authority, stock found was much less at about Rs. 2,00,000/-. Acting solely on that, Assessing Authority rejected the books of accounts of the assessee and estimated its turnover on sales of sweets, namkeen and bakery items at Rs. 4,00,00,000/- against disclosed turnover Rs. 49,65,287/- In appeal, the First Appeal Authority confirmed the rejection of books of accounts but granted some reduction in the estimation of turnover of undisclosed sales of sweets, namkeen and bakery items. Same result was followed in appeal before the Tribunal wherein further reduction was granted in estimation of turnover of undisclosed sales and undisclosed purchases.
5. In the first place, by way of principle, rejection of books of accounts may not arise solely for reason of stock actually found being less than stock found recorded in the books of accounts. It is so because once stock is found recorded in the books, the same may not be treated as unaccounted. Unless finding is recorded that the stock thus recorded in the books of accounts was different from that actually found, mere shortage of stocks may only indicate some delay in preparation of the bills, etc. Similar view was taken by this Court in Sales/Trade Tax Revision No. 1241 of 2008 (M/s Shyam Traders Vs. Commissioner Commercial Tax Lucknow), decided on 18.7.2019.
6. Second, more remarkably, in the context of present facts, other than the above discrepancy, absolutely no material was discovered during the survey and no other material has been referred to, in the order passed by Assessing Authority, Appeal Authority and the Tribunal to establish concealed turnover, that may lead to rejection of books of accounts and enhancement of turnover on best judgement assessment basis.
7. Rejection of books of accounts has serious consequences. Unless credible material exists to reach the conclusion that certain turnover had not been accounted, Assessing Authority may not reject the results on mere suspicions.
8. In the present case, it clearly appears, Assessing Authority proceeded to reject the books of accounts on his impression of concealed trading engaged by the assessee. In the first place, suspicion cannot substitute the requirements of reasons. Second, it also cannot be lost sight that the survey dated 18.10.2011 was conducted few days before the festival Diwali. Therefore, in absence of any adverse material, the rejection of books of accounts on mere suspicions entertained by the Assessing Authority, is found to be based on no evidence.
9. Once no defect was found in the books of accounts, there remained no basis to reject the book results or to allow for any enhancement of turnover. It may also be noted, there is not a single transaction of concealed turnover discovered during the assessment year in question.
10. Accordingly, present revision is allowed. Question of law (as framed above) is answered in the negative i.e. in favour of assessee and against the revenue.
Order Date :- 22.7.2022
Prakhar
