Madras High Court
Tvl.Nakoda Agencies vs The Commissioner Of Commercial ... on 11 October, 2022
W.P(MD).No.13787 of 2020
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 11.10.2022
CORAM
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.P(MD).No.13787 of 2020
and
W.M.P(MD).No.11436 of 2020
Tvl.Nakoda Agencies,
Represented by its Proprietor,
G.Pawan Kumar ... Petitioner
Vs.
1.The Commissioner of Commercial Taxes,
O/o The Principal and Special Commissioner
of Commercial Taxes,
Ezhilagam, Chepauk,
Chennai-600 005.
2.The Assistant Commissioner (CT),
Rockfort Assessment Circle,
Commercial Taxes Complex,
Contonement,
Trichy-620 001. ...Respondents
Prayer : Writ Petition filed under Article 226 of the Constitution of India,
praying this Court to issue a Writ of Certiorari, calling for records pertaining
to the impugned proceedings of the 2nd Respondent in
TIN/33223581453/2013-2014, dated 31.07.2020 and quash the same.
1/7
https://www.mhc.tn.gov.in/judis
W.P(MD).No.13787 of 2020
For Petitioner : Mr.B.Rooban
For Respondents : Mr.M.Prakash
Additional Government Pleader
ORDER
This writ petition is filed challenging the impugned order passed by the
2nd Respondent, dated 31.07.2020 for the Assessment year 2013-2014.
2. The Petitioner is engaged in the business of sales of general
consumer products like face powder, pain balms, chocolates, shaving blades
etc. The Petitioner is an assessee registered on the files of the 2nd Respondent.
There was an inspection, which was conducted in the place of the Petitioner's
business premises on 06.12.2014 and 08.04.2014. During the course of
inspection, the defect, which was noted that verification of bank statement
reveals that a sum of Rs.2,24,51,359/-(Rupees Two Crores Twenty Four
Lakhs Fifty One Thousand Three Hundred and Fifty Nine only) has been
credited to the account of the Petitioner, whereas, the sales statement in terms
of the return only disclosed turn over of Rs.1,88,09,056/-(Rupees One Crore
Eighty Eight Lakhs Nine Thousand and Fifty Six only). The difference of
Rs.36,42,309/-(Rupees Thirty Six Lakhs Forty Two Thousand Three Hundred
and Nine only) was treated as sales suppression and tax has been levied.
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W.P(MD).No.13787 of 2020
3. The Petitioner in response to the above proposal submitted his
objections, wherein, it was explained that the difference in bank statement/
deposit and sales statement do not relate to actual transaction of sales of
goods. Thus, any levy of tax is impermissible. However, the impugned order
has been passed rejecting the above objections of the Petitioner stating that in
the absence of any other business carried out by the Petitioner, the only
inference that could be drawn was that the difference between the bank
statement and sales statement represented sales turn over and thus liable to
tax.
4. It is submitted by the learned counsel for the Petitioner that the
impugned order has been passed on gross non-application of mind,
particularly, insofar as the first aspect viz., the difference between the bank
statement and the turn over report. In this regard, reference was made to the
judgment of the hon'ble Supreme Court in the case of Girdhari Lal Nannelal
Vs The Sales Tax Commissioner reported in 39 STC 30 SC, wherein, it was
held that for the purpose of levy of sales tax mere unexplained acquisition of
money from un-disclosed sources may not be adequate and it is necessary for
the Assessing Officer to show sources of money resulted from transactions
liable to sales tax. The relevant portion is extracted below:
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W.P(MD).No.13787 of 2020
“7. The approach which may be permissible for imposing liability
for payment of income-tax in respect of the unexplained
acquisition of money may not hold good in sales tax cases. For
the purpose of income-tax it may in appropriate cases be
permissible to treat unexplained acquisition of money by the
assessee to be the assessee's income from undisclosed sources and
assess him as such. As against that, for the purpose of levy of
sales tax it would be necessary not only to show that the source of
money has not been explained but also to show the existence of
some material to indicate that the acquisition of money by the
assessee has resulted from transactions liable to sales tax and not
from other sources. Further, whereas in a case like the present a
credit entry in respect of Rs. 10,000 stands in the name of the wife
of the partner, no presumption arises that the said amount
represents the income of the firm and not of the partner or his
wife. The fact that neither the assessee-firm nor its partner or his
wife adduced satisfactory material to show the source of that
money would not, in the absence of anything more, lead to the
inference that the said sum represents the income of the firm
accruing from undisclosed sale transactions. It was, in our
opinion, necessary to produce more material in order to connect
the amount of Rs. 10,000 with the income of the assessee-firm as a
result of sales. In the absence of such material, the mere absence
of explanation regarding the source of Rs. 10,000 would not
justify the conclusion that the sum in dispute represents profits of
the firm derived from undisclosed sales.”
5. It was submitted that though the above judgment of the Hon'ble
Supreme Court was brought to the notice of the learned Assessing Officer, the
same has not been even dealt with by the Assessing Officer, which clearly
shows gross non-application of mind. Insofar as the stock variation is
concerned, it is submitted by the learned counsel for the Petitioner that the
revised returns was submitted by the Petitioner voluntarily much prior to date
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W.P(MD).No.13787 of 2020
of the inspection. However, the order of the Assessment is passed by stating
that the response/reply and the documents submitted are an after thought and
fabricated. The assessment order does not give any reason to reject the
submission/explanation offered and documents submitted by the Petitioner.
6. To the contrary, it is submitted by the learned Additional Government
Pleader for the Respondents that the order of the assessment has been made
after affording an opportunity to the Petitioner.
7. Heard the learned counsels for both the parties.
8. This Court finds that the order of the 2nd Respondent is liable to be
set aside inasmuch as the entire assessment order was made on gross non-
application of minds to the Petitioner’s objection and despite the Petitioner
making a specific reference to the judgment of the Hon'ble Supreme Court in
the case of Girdhari Lal Nannelal cited supra, the 2nd Respondent has passed
the assessment order, without even a reference to it. Insofar, as stock
variation, the Petitioner's objections, revised returns and documents are
rejected by merely stating that it is an after thought and fabricated without
furnishing/supplying any reason in support thereof.
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W.P(MD).No.13787 of 2020
9. In view of the same, the impugned order, dated 27.06.2020 is set
aside and the Respondents are directed to re-do the assessment keeping in
mind the principles laid down in the case of Girdhari Lal Nannelal cited
supra and also affording an opportunity to the Petitioner and after taking into
account the Petitioner's submission and dealing with the same.
10. With the above direction, the writ petition stands disposed of. No
costs. Consequently, connected miscellaneous petition is closed.
11.10.2022
Index : Yes / No
Internet : Yes/ No
sn
To
1.The Commissioner of Commercial Taxes,
O/o The Principal and Special Commissioner
of Commercial Taxes,
Ezhilagam, Chepauk,
Chennai-600 005.
2.The Assistant Commissioner (CT),
Rockfort Assessment Circle,
Commercial Taxes Complex,
Contonement,
Trichy-620 001.
https://www.mhc.tn.gov.in/judis
W.P(MD).No.13787 of 2020
MOHAMMED SHAFFIQ, J.
sn
W.P(MD).No.13787 of 2020
11.10.2022
https://www.mhc.tn.gov.in/judis
