Madras High Court
State Of Tamil Nadu vs D.T. Kaliaperumal Naidu And Company on 2 February, 1995
Author: T. Jayarama Chouta
Bench: T. Jayarama Chouta
JUDGMENT Thanikkachalam, J.
1. The department is the petitioner herein. The assessee is a dealer in provision and fertilisers for the assessment year 1978-79. The assessee reported a total and taxable turnover of Rs. 1,36,44,616 and Rs. 32,64,408 respectively. The assessing officer found that there were two inspections during the year under consideration and large scale suppressions were noticed. On April 25, 1978 suppression was noticed to the tune of Rs. 570. The assessing officer added an addition of Rs. 5,130 being nine times the actual suppression. During the inspection on March 22, 1979 suppressions were noticed on several items. The assessing officer made addition equal to two times the actual suppression. The total suppression was fixed at Rs. 6,53,412 and the assessing officer also made an addition of Rs. 2,000 towards defects in the accounts. Finally, the assessing officer, determined the total and taxable turnover at Rs. 1,44,84,936 and Rs. 39,21,841 respectively. The assessing officer also levied a penalty of Rs. 12,772 under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act") for the suppression.
2. On appeal, the Appellate Assistant Commissioner gave partial relief. Aggrieved, the assessee filed a second appeal before the Appellate Tribunal. The department also filed enhancement petition.
3. On considering the facts arising in this case, the Tribunal made an ad hoc addition of Rs. 5,000 and another addition of Rs. 5,000 for probable suppression. The penalty was reduced to Rs. 200 under section 12(3) of the Act. The enhancement petition filed by the Revenue was dismissed and consequently there was no question of levy of additional sales tax.
4. It is against this order, the department is in revision before this Court. The department is questioning the order passed by the Tribunal in the quantum appeal, enhancement petition and penalty appeal.
5. Learned Additional Government Pleader (Taxes) submitted that the assessee posted the sale entries after the inspection was over. The bills were prepared subsequent to the inspection. The day book chittai and sale bills were manipulated. Therefore, according to learned Additional Government Pleader (Taxes), the assessment made by the assessing officer should be accepted. With regard to the enhancement petition, the learned Additional Government Pleader (Taxes) submitted that but for the timely inspection and search made by the department, the assessee would not have come forward to submit the suppressed turnover for levy of tax. Therefore the actual suppression determined by the assessing officer, should be sustained.
6. On the other hand, the case of the assessee was that it maintained separate accounts for taxable and non-taxable goods, that it is not practicable to maintain separate sales accounts for different kinds of goods handled by the assessee, that the gross profits earned by the assessee is normal, that the excess stocks noted during the inspection was due to incorrect stock taking by the officer, that the shortage noticed is due to non-posting of accounts, that cooly payments entered in the slips were taken as suppressions, was pointed out by the assessing officer, in his order, that the stock difference cannot be treated as suppression, that the assessing officer, himself admitted that the assessee raised sale bills and made entries in the accounts and that all the sales have been accounted for in the accounts and included in the monthly returns. Therefore, it was submitted that the suppression alleged by the assessing officer is unwarranted and the penalty is not justified.
7. The Tribunal pointed out that the difference in stocks were treated as suppressions by the assessing Officer. According to the Tribunal, if the sale bills are taken into account, there will be no shortage or excessive stocks. The assessee has explained most of the stock differences. The Tribunal pointed out that the sales have been included in the monthly returns and tax due on the sales have been paid by the assessee. According to the Tribunal, the department has not disproved the explanation offered by the assessee. The transactions have been supported by valid sale bills. Most of the sales are second sales in the State. The assessing officer has treated the second sales as representing first sales and subjected the assessee to tax. The Tribunal pointed out that the department has not proved that the assessee manipulated the accounts subsequent to the inspection. Therefore ultimately the Tribunal came to the conclusion that the assessee has explained more than 90 per cent of the alleged suppression. Considering all these aspects, the Tribunal held that the suppression would not exceed Rs. 5,000 in any case. Out of the reported total turnover of Rs. 1,36,44,616 the taxable turnover amount to Rs. 32,64,408 only. Hence, the Tribunal fixed the sale suppressions reasonably at Rs. 5,000 taxable at 4 per cent. Considering the fact that the sales during the year are mostly second sales and there was only a small extent of stock discrepancies, another addition of Rs. 5,000 was made as ad hoc addition. Considering the nature of quantum of suppressions, the Tribunal reasonably refixed the penalty at Rs. 200 under section 12(3) of the Act. Accordingly the enhancement petition was dismissed. The reasons given by the Tribunal in determining the addition towards the suppressed turnover in view of the discrepancies noticed, appear to be quite convincing. Therefore, we are not inclined to interfere with the suppressed turnover determined and the penalty refixed by the Tribunal. In view of the abovesaid order passed in the quantum appeal as well as the enhancement petition, the question of levy of additional sales tax does not arise. Thus, inasmuch, we see no infirmity, in the order passed by the Tribunal in the quantum appeal, in the penalty appeal and in the enhancement petition, we are not inclined to interfere with the order passed by the Tribunal.
8. In the result, the revisions are dismissed. No costs.
9. Petition dismissed.