Allahabad High Court
M/S Mittal Electronics System vs Commissioner Commercial Tax on 30 September, 2022
Author: Rohit Ranjan Agarwal
Bench: Rohit Ranjan Agarwal
HIGH COURT OF JUDICATURE AT ALLAHABAD Reserved on 22.09.2022 Delivered on 30.09.2022 Court No. - 10 Case :- SALES/TRADE TAX REVISION No. - 312 of 2022 Revisionist :- M/S Mittal Electronics System Opposite Party :- Commissioner Commercial Tax Counsel for Revisionist :- Alok Saxena Hon'ble Rohit Ranjan Agarwal,J.
1. Heard Sri Alok Saxena, learned counsel for the revisionist and Sri Ravi Shanker Pandey, learned Standing Counsel appearing for the opposite party.
2. This Commercial Tax Revision filed under Section 58 of U.P. Value Added Tax Act, 2008 (hereinafter called as ''Act of 2008') assails the judgment and order passed by Commercial Tax Tribunal, Meerut (Division Bench) dated 20.06.2022 in Second Appeal No. 71 of 2020 partly allowing the appeal which was filed against the judgment dated 12.02.2020 passed by Additional Commissioner, Grade-II (Appeals)- IInd, Commercial Tax, Meerut.
3. Facts in nutshell, are that assessee is a registered firm within the State of U.P. under U.P. Act of 2008. It is engaged in the business of trading and repairing of inverter/stabilizer, UPS and batteries. The dispute is for the assessment year 2013-14. On 24.04.2014, the premises of the assessee was surveyed/inspected. During the survey, the account books were not produced before the SIT for inspection and verification of the stock available at the business premises. During the assessment proceedings, the assessee had produced the books of account which the assessing officer has refused to accept the same, and an assessment was framed on 25.05.2018 and the books of accounts were rejected and the purchase and sale turnover was enhanced by Rs.24,00,000/- and Rs.40,00,000/-. The assessing authority apportioned the enhanced turnover in the ratio of 10%:90%, 10% was assessed at 5% and 90% was assessed at 14%. The tax assessed was of Rs.2,82,000/- on the enhanced purchase turnover and tax of Rs.4,70,000/- on enhanced sale turnover. After adjusting the admissible input tax credit, the assessing officer created a demand of Rs.7,55,000/-.
4. Aggrieved by the assessment order, the assessee filed an appeal before first appellate authority, who vide judgment and order dated 12.02.2022 dismissed the same. Against the said judgment, a second appeal was preferred before the Tribunal being Second Appeal No. 71 of 2020. The Tribunal modified the judgment of the first appellate authority and reduced the quantum of tax imposed by the assessing authority by Rs.5,48,465/-. Hence, the present revision.
5. Sri Saxena, learned counsel appearing for the revisionist firm submitted that out of 6 loose papers which were seized by the SIT during survey and on the basis of which the enhancement in turnover was made by the assessing authority, the two indicators, 1 and 3 were entered into books of account. According to him, the loose paper which was termed as indicator 2 was only in form of quotation, and the other termed as indicator 4 was only in form of an estimate for CCTV cameras. The other indicator 5 was only in the form of an inquiry made by one M/s. Synergy System, and there was no transaction of any sale or purchase with the said firm. Lastly, the 6th indicator was in form of quotation by one Mr. Raju and there was no sale to him of any material.
6. According to assessee counsel, the Tribunal has not recorded any finding about the claim made by the firm as to indicator 5 and 6 and an objective assessment has been made on the material on record without recording any reason enhancing the purchase and sale turnover. He then contended that Tribunal without recording any finding on indicators 5 and 6 had made the additions. He also contended that Tribunal failed to consider that it has imposed dual tax on the firm i.e. on the enhanced purchase turnover and the tax on the entire corresponding sale turnover, and had committed gross error in not granting benefit of ITC to the assessee firm on the enhanced purchase turnover. Reliance has been placed upon a decision of co-ordinate Bench of this Court in case of Mahesh Coal Traders vs. Commissioner Commercial Tax, Sales/Trade Tax Revision No. 976 and 977 of 2013, decided on 13.04.2020.
7. Sri Pandey, learned Standing Counsel had defended the order of assessing authority as well as the order passed by the Tribunal and submitted that during the survey the books of account of the assessee firm were missing and the entries were made subsequently at the time of assessment and as such the presumption drawn by the assessing authority was correct which need no interference by this Court.
8. I have heard respective counsel and perused the material on record.
9. It is not in dispute that a survey was conducted on the premises of the assessee firm on 24.04.2014. Six loose papers were found during the survey. Paper No. 1 relates to 660 piece 8 mm tube bag which was purchased by the assessee firm from unregistered dealer and transaction of paper no. 3 which was sale of battery to one Manendra Goswami for Rs.19,000/- was subsequently entered into the books of account which was produced at the time of assessment.
10. The Tribunal on the basis of the entry made in the books of account of these two loose papers at the time of assessment held that the enhanced sale was in excess to the quantum of purchase shown in the loose paper and reduced it to Rs.6 lacs instated of Rs.24 lacs as made by assessing authority, and further reduced quantum of enhanced sale turnover from Rs.40 lacs to Rs.10 lacs and thus reduced the tax demand of Rs.7,55,000/- by Rs.5,48,465/-.
11. From the perusal of the order of the Tribunal, it is clear that it has not recorded any finding as to how it has arrived at only reducing the quantum to such extent when it has recorded that entries in the books of account for two loose papers, paper no. 1 and 3 were made subsequently, and solely on the basis of estimate had refused the quantum without any material on record.
12. The Tribunal is the last fact finding authority and before arriving at any finding in case of either increasing or decreasing the quantum it has to record a specific finding as to how it has arrived at the figure. The tax authorities or the tax Tribunal are not justified in increasing or decreasing the quantum at their whims without any rationale or justification.
13. Increasing or decreasing of the quantum either creates or reduces tax liability which either affects the assessee or the revenue. Thus, the taxing authorities should be very careful and watchful in passing orders holding liability upon any assessee for the payment of tax or reducing the quantum. The exercise should not be at the whims and fancies of the tax authorities and the Tribunal, because such exercises have great fiscal impact both on the assessee and the revenue.
14. The Tribunal which is the last fact finding authority should not pass an order in such a casual manner and before arriving at finding should record specific reason as to how it has arrived at such finding either in extending the benefit or denying the benefit.
15. Considering the facts and circumstances of the case, I find that the order of the Tribunal dated 20.06.2022 is unsustainable in the eyes of law and the same is hereby set aside and the matter is remanded back to the Tribunal to consider the matter afresh on merits and record specific finding to each of the grounds so raised in the revision by the assessee.
16. The said exercise shall be completed by the Tribunal within a period of two months, from the date of production of certified copy of this order.
17. The revision stands partly allowed.
Order Date :- 30.09.2022 V.S.Singh