Allahabad High Court
M/S Jai Ma Vishnav Brickfield ... vs Commissioner Of Commercial Taxes U.P. ... on 20 November, 2019
Author: Rajan Roy
Bench: Rajan Roy
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Court No. - 7 Case :- TRADE TAX REVISION No. - 210 of 2011 Revisionist :- M/S Jai Ma Vishnav Brickfield Asai-Ka-Purwa Opposite Party :- Commissioner Of Commercial Taxes U.P. Lucknow Counsel for Revisionist :- Mudit Agarwal Counsel for Opposite Party :- C.S.C. Hon'ble Rajan Roy,J.
Heard Shri Mudit Agarwal, learned counsel for the revisionist and Shri Rohit Nandan Shukla, learned Additional Chief Standing Counsel for the State.
This revision was admitted on 14.11.2019 on the following questions of law:-
"1. Whether there is any requirement under U.P. Trade Tax Act or Rules framed thereunder which makes it mandatory for a brick kiln owner to inform the department about the starting or closure of firing (Phukai) ?
2. Whether in the absence of any such provision making it mandatory for Brick Kiln owner to inform the Department about the stopping of firing (Phukai) the findings recorded by the Department and the Tribunal regarding the period for which the Brick Kiln was run, is sustainable in law or perverse ?"
The contention of Shri Mudit Agarwal, learned counsel for the revisionist with regard to the aforesaid questions of law is that there is no such requirement in the U.P. Trade Tax Act, 1948 requiring the brick kiln owner to furnish intimation to the Sales Tax Authority/Assessing Authority about the closure of the Brick Kiln or the period it has been functioning. In this regard he relied upon Para 7 of the Single Judge Bench decision of this Court reported in 1984 U.P.T.C. 686; Commissioner of Sales Tax, U.P. Lucknow Vs. S/S. Malik Raj Arora wherein it has been observed that there is no such mandatory requirement in the Act, 1948 requiring an assesee dealing in manufacture and sale of bricks to give an intimation about the closure of the Brick Kiln.
Shri Agarwal in all fairness submitted that he is not disputing the rejection of books of accounts of the revisionist nor the method of calculation of total production and sale by the Assessing Officer as affirmed by the Tribunal, however, he is disputing the period of functioning of the Brick Kiln as determined by the Assessing Officer to be the 38 days. The contention is that the Brick Kiln was operative only from 01.04.2000 to 08.04.2000 and on 10.04.2000 when survey was conducted by the Trade Tax Authorities the Survey Team did not find any 'Phukai' (firing) taking place in the Brick Kiln, therefore, the impugned order is contrary to the provisions of the Act, 1948 and unsustainable in law, especially as, no stock of coal was found during the survey.
On the other hand Shri Rohit Nandan Shukla, learned Additional Chief Standing Counsel for the State also relied upon the aforesaid decision in the case of S/S. Malik Raj Arora (supra) to delineate the scope of a best judgment assessment. It is also his contention that even if there is no specific provision in the Act, 1948 requiring the assessee to inform the Assessing Officer about the closure of Brick Kiln any prudent businessman in order to avoid tax liability would do it and there is no reason as to why the revisionist should not have done something which is ordinarily practiced by others in the same business as has been noted by this Court in the judgment rendered in S/S. Malik Raj Arora (supra).
Having heard the learned counsel for the parties and perused the records as far as the question no. 1 is concerned, no doubt none of the counsel for the contesting parties could point out any such provision in the Act, 1948 mandatorily requiring the assessee to inform the Assessing Officer about the closure of Brick Kiln, however, the Court finds merit in the submission of Mr. Shukla that any prudent businessman would, in order to avoid tax liability, give such intimation to the Assessing Officer. Whether in the absence of such intimation this by itself would be a ground for imposing tax liability upon the revisionist, is another question which would be considered in the context of Question no. 2.
The Question No. 1 is answered accordingly.
As regards Question No. 2 is concerned, on a bare perusal of the order of the Assessing Authority the Court finds that the revisionist applied for registration under the Act, 1948 on 24.04.2000 and in this process he got his statement recorded before the Assessing Authority on 12.05.2000 but did not make any such statement that the Brick Kiln has been closed on 08.04.2000 which he was expected to do. This is a very important circumstance which goes against the revisionist. Apart from it, the Assessing Officer found the assertion of the revisionist that the 4,70,000/- Bricks, which were found during survey, were used by revisionist for his own personal use, unacceptable and unproved in the absence of requisite evidence in this regard.
It is not out of place to mention that even if there is no requirement in the Act, 1948 for the assessee to intimate the Assessing Officer about the closure of Brick Kiln as already stated in the context of Question No. 1 any prudent person would inform the Assessing Officer in this regard to avoid tax liability. Furthermore, if, he does not do so then the burden is upon him to show that the Brick Kiln was not functional after the alleged date of closure. No such evidence was led by the revisionist whose accounts were rejected which has not been put to challenge. The Assessing Officer has assessed the period during which the Brick Kiln remained operative as 38 days based on his best judgment assessment. As has been observed in the decision of S/S. Malik Raj Arora (supra) once the books of account are rejected it lies in the discretion of the Assessing Authority to make a best judgment assessment. While making a best judgment assessment there is always some room for guess work. To what extent an increase in the amount of turnover is justified so as to save it from the vice of being arbitrary or capricious depends on the facts of each case and it is not possible to lay down any inflexible rule in this behalf.
In the facts of the present case this Court does not find any arbitrariness in the best judgment assessment made by the Assessing Officer as he has given cogent reasons for all his findings. The fact that coal was not found available on 10.04.2000 when survey had taken place has also been considered and it has been held that about 40,000/- Bricks were found within the Brick Kiln having completed the process of 'Pathai' which is the process prior to the stage of 'Phukai'. The question is inexplicable as to why the 40,000/- Bricks were there if no 'Phukai' had to take place. Moreover, there are other reasons which have been given in the assessment order all of which are indicative of an on going process of operation of the Brick Kiln and the Assessing Officer can not be faulted for having said that coal would have been procured for 'Phukai' of the Kachcha Bricks which were available on the Brick Kiln. During survey the process of 'Pathai' was found to be on and a good part of season was still remaining, therefore, he was justified in drawing the conclusion that 'Phukai' would have taken place subsequently after procuring coal. On the assertion made by him the Assessing Officer has determined the liability of the revisionist at Rs.1,32,843/-.
In these view of the matter as far as Question No. 2 is concerned, the Court does not find any error in the findings of the Assessing Officer as affirmed by the Tribunal. The findings of the First Appellate Authority were clearly perverse based on conjecture and surmises. The Tribunal's order does not suffer from any error.
The revision accordingly fails and is dismissed.
Interim order is discharged. Consequences shall follow accordingly as per law.
Order Date :- 20.11.2019 R.K.P.