Kerala High Court
M/S.Sunny Jacob Jewellers And Wedding vs The State Of Kerala on 25 November, 2009
Bench: C.N.Ramachandran Nair, V.K.Mohanan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 265 of 2009()
1. M/S.SUNNY JACOB JEWELLERS AND WEDDING
... Petitioner
Vs
1. THE STATE OF KERALA.
... Respondent
For Petitioner :SRI.C.K.THANU PILLAI
For Respondent : No Appearance
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN
Dated :25/11/2009
O R D E R
C.N.RAMACHANDRAN NAIR &
V.K.MOHANAN, JJ.
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S.T.Rev.No. 265 of 2009
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Dated this the 25th day of November, 2009
J U D G M E N T
Ramachandran Nair,J:
This revision is filed by the assessee which was engaged in gold jewellery business at Kottarakkara during the year 2004-05. While conducting inspection in the premises of the sister concern of the petitioner at Kottayam, the authorities found assessee's purchase of massive quantity of 14.42488 Kgms. of gold from two dealers, located in Bangalore, the value of one purchase being Rs.82,94,306/-. However, when the books of accounts of the petitioner which was carrying on business at Kottarakkara, were examined, it was found that the purchase turnover was not accounted in the returns filed nor in the certificate of account produced in Form 50B. However, the assessee claimed this as transaction of loan of stock for exhibition in their shop. S.T.Rev No.265 of 2009
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The detection of suppression led to penalty which is stated to be pending before the higher authorities. In the course of assessment, the assessing officer rejected the petitioner's explanation of loan arrangement for exhibition and made best judgment assessment by including the suppressed turnover together with probable suppression estimated by the officer. The first appeal was unsuccessful and therefore, the petitioner filed second appeal before the Tribunal. The Tribunal substantially confirmed the order of the first appellate authority, but granted minor modification pertaining to addition towards the purchase of packing material. It is against this order of the Tribunal, the petitioner has filed this revision petition.
2. We have heard Advocate Sri.C.K.Thanu Pillai, appearing for the petitioner and the Government Pleader for the respondent.
3. Even though counsel for the petitioner pressed S.T.Rev No.265 of 2009 :-3-:
for acceptance of the loan transaction, we are unable to accept the same because until detection of the suppressed purchases in the course of search in the premises of petitioner's sister concern at Kottayam, the petitioner had not disclosed anywhere in the returns filed or in the accounts, any such arrangement. The gold involved is a huge quantity of 14.42488 Kgms. valued at around Rs.83 lakhs and no one would give such huge quantity of gold valued so much to any person without at least adequate security and charges for use of the gold for exhibition. The petitioner has not even furnished the details of items of gold alleged to have been taken from the other dealer for exhibition. No documents of transport or transit insurance, security furnished or charges paid are produced. Obviously, in our view, all the authorities rightly found that the claim of taking stock from another dealer for exhibition is a bogus story and we therefore reject the same. The petitioner has also not produced any S.T.Rev No.265 of 2009 :-4-:
document from the so-called owners of the gold to prove the transaction. Therefore, the petitioner's claim for loan arrangement for exhibition does not stand established. The only presumption is unaccounted purchase of old gold, conversion of the same into the new ornaments and the sale of the same in the shop of the petitioner without accounting such sales.
4. The counsel contended that even if the transaction is found to be interstate purchase from Bangalore suppressed by the petitioner, the same should not lead to addition for levy of purchase tax under Section 5A which can be only on local purchase in the State. Even though the argument is quite attractive, we are unable to accept the petitioner's claim of interstate purchase because the same does not stand proved. Further, since substantial amount is seen accounted towards labour charges paid in Kerala, the only presumption is that the interstate transaction claimed from the parties in S.T.Rev No.265 of 2009 :-5-:
Bangalore can be only local purchase of old gold ornaments, conversion of the same to new gold ornaments and sale of the same by suppression of both purchase of old gold and sale of new gold ornaments. So much so, purchase tax on old gold as well as sales tax on corresponding suppressed sales turnover were rightly levied. Therefore, in principle, we uphold the order of the Tribunal confirming the rejection of the books of accounts and estimation of turnover. The only course open to the assessing officer was only estimation on a rational basis. It is seen that estimation is made both for purchases of old gold ornaments and corresponding sale of new gold ornaments with gross profit addition. Since the petitioner had commenced business in 2004-05 and the Department had not detected any other unaccounted purchases other than the massive quantity referred above, we feel, three times addition on purchase and sales is on the higher side. We feel, the addition of equal amount for the suppression S.T.Rev No.265 of 2009 :-6-:
both for the purpose of purchase tax and sales tax will serve the ends of justice. We, therefore, modify the assessment confirmed by the first appellate authority and the Tribunal, by reducing the addition to equal amount. In other words, the total estimation will be twice the value of suppression with proportionate gross profit addition for both purchase tax and sales tax.
The revision is allowed to this extent.
sd/-
C.N.Ramachandran Nair, Judge.
sd/-
V.K.Mohanan, Judge.
MBS/
-True Copy-
P.S.to Judge.
S.T.Rev No.265 of 2009 :-7-:
C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ.
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J U D G M E N T DATED: -9-2009 S.T.Rev No.265 of 2009 :-9-: