State Of Kerala vs State Of Kerala
2021 Latest Caselaw 2167 Ker

             IN THE HIGH COURT OF KERALA AT ERNAKULAM

                             PRESENT

               THE HONOURABLE MR.JUSTICE S.V.BHATTI

                                &

          THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS

   WEDNESDAY, THE 20TH DAY OF JANUARY 2021 / 30TH POUSHA, 1942

                       OT.Rev.No.55 OF 2016

   AGAINST THE ORDER OF THE KERALA VALUE ADDED TAX/ AGRICULTURAL
  INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,
       KOZHIKODE IN T.A.(VAT) NO.776/2014 DATED 31.08.2015


REVISION PETITIONER/ RESPONDENT/ RESPONDNT/ REVENUE :

             STATE OF KERALA,
             REPRESENTED BY THE DEPUTY COMMISSIONER(LAW),
             COMMERCIAL TAXES, ERNAKULAM.

             BY GOVERNMENT PLEADER SRI.SHAMSUDEEN


RESPONDENT/ APPELLANT/ APPELLANT/ ASSESSEE :


             P.P.KHADER,
             M/S P.P.K.STATIONERY,
             KAMBIL, KANNUR, PIN - 670 001.

             R1 BY ADV. SRI.R.RAMADAS


     THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON
20.01.2021, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
 OT.Rev.No.55 OF 2016

                                    2




                                 ORDER

Dated this the 20th day of January 2021

Bechu Kurian Thomas, J.

For the assessment year 2009-2010, alleging that the

assessee had suppressed turnover of Rs.4,81,498/-, best

judgment assessment was resorted to by the assessing officer

and made an addition of 50% of the suppressed turnover. In

appeal, the Appellate Authority found the best judgment

assessment justified and directed the assessing officer to verify

the documents and allow the input tax credit to the extent

admissible. The assessee took up the matter in further appeal

before the Appellate Tribunal. By the impugned order, the

Tribunal though upheld the finding of purchase suppressions

found the addition of 50% of the purchase suppressions to be

improper since the rejection of accounts after verification was,

after the close of the financial year concerned.

2. The department has come up in revision under

Section 63 of the Kerala Value Added Tax Act, 2003 (for short, OT.Rev.No.55 OF 2016

'the Act'). The questions of law raised in revision on the basis of

which admission was granted are as follows :-

1. Whether the Tribunal is justified in deleting the addition only for the reason that, the detection of offence was after the assessment year.

2. Whether the Tribunal is justified in deleting the addition when it is clearly found that, the assessee has purposefully evaded tax and it was unearthed only on verification of the documents by the assessing authority.

3. Whether the Tribunal is justified in upholding that, the assessment U/s. 25(1) is justified but deleting the addition without valid reasons.

4. Is it proper for the Tribunal to interfere with the assessment when it is clearly proved that, the assessee has suppressed the turnover so as to limit the turnover below the registerable turnover.

3. All authorities have come to the conclusion that the

asssessee had suppressed purchases to the tune of

Rs.4,81,498/-. Those conclusions by the statutory authorities

have not been challenged by the assessee. The only question

arising in this revision is as to whether the deletion of 50% of

additions as directed by the Appellate Tribunal was justified in the

facts and circumstances of the case.

OT.Rev.No.55 OF 2016

4. In the Full Bench decision reported in

V.Aboobacker v. State of Kerala [(2010) 27 VST 308

(Ker)] it was held that proof of purchase suppression leads to

only one conclusion that the accounts are incomplete. If the

accounts are found to be incomplete, it is unreliable and the

recourse available to the assessing officer is to make a best

judgment assessment. It was also observed that, while making

best judgment assessment, the assessing officer should arrive at

a conclusion without any bias and on a rational basis and that

however, the assessing authority should not be vindictive or

capricious and assessment should be made on a bona fide

estimate and on a rational basis.

5. Relying upon the aforesaid observations, this Court

had in O.T.R.No.224/2014 and connected cases upheld the

addition of 25% to 50% in the respective cases.

6. With the above proposition of law in mind, we find

that in the instant case, the Tribunal set aside the addition of

50% of the purchase suppressions to the total turnover, solely on

the ground that the rejection of accounts was after close of the

financial year concerned. The said finding was based upon the OT.Rev.No.55 OF 2016

judgments of this Court which issues were considered again by

this Court in OTR.No.224 of 2014. It is seen from the aforesaid

judgment in OTR.No.224 of 2014 that after noting the pattern of

suppression or detection of more than one suppression,

additions of 25% or 50% as the case may be, were upheld by

this Court.

7. A perusal of the impugned orders, especially the

assessment order (produced as Annexure A) shows that the

assessing officer had noticed the facts arising in the case and

imposed 50% of the suppressed turnover as an addition. A

reading of the assessment order shows that the assessing officer

was justified in coming to the conclusion to make additions of

suppressed purchases to the total turnover. However, considering

the totality of the circumstances arising in the case, we are of the

view that the addition of 50% was excessive and not warranted.

Taking into account the nature of business and the quantum of

suppression, an addition of 25% would have been reasonable.

8. In such circumstances, we deem it fit to interfere

with the order of Tribunal deleting the addition of the suppressed

turnover originally added by the Assessing Officer. However, OT.Rev.No.55 OF 2016

considering the type of business, the amount of suppression and

nature of suppression detected, we feel that an addition of 25%

of the suppressed purchases would be reasonable.

9. Of the four questions of law raised, we are of the

view that questions 1 to 3 are already covered by the decisions in

V.Aboobacker's case (supra) and that in OTR.No.224/2014 of

this Court. As relating to question No.4 we hold that the Tribunal

erred in interfering with the order of assessment to the extent

indicated in this judgment.

In the above circumstances, we allow the appeal and

set aside the judgment of the appellate Tribunal in TA (VAT)

No.776/2014 dated 31.08.2015 and direct addition of 25% of the

suppressed purchases to the turnover of the first respondent.

The revision petition is thus allowed.

Sd/-

S.V.BHATTI, JUDGE

Sd/-

BECHU KURIAN THOMAS, JUDGE

RKM OT.Rev.No.55 OF 2016

APPENDIX PETITIONER'S EXHIBITS:

ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX OFFICER, 1ST CIRCLE, KANNUR DATED 05.11.2013.

ANNEXURE B A TRUE COPY OF THE ORDER DATED 22.07.2014 PASSED BY THE ASSISTANT COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOZHIKODE IN VATA 1531/13.

ANNEXURE C A CERTIFIED COPY OF THE ORDER OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND KOZHIKODE IN TA(VAT) 776/14 DATED 31.08.2015.

ANNEXURE C(A)          A TRUE COPY OF ANNEXURE C.