2011 (7) TMI 1035 - HC - VAT and Sales Tax

Rejection of books of accounts - addition/deletion made on estimate basis - Held that - When no stock register of finished goods was produced at any stage then only recourse is left to make addition on estimate basis and the same was done in the present case. In the facts and circumstances, addition made/partly deleted on estimated basis appears reasonable - revision dismissed - decided against assessee.

Summary

Issues:
Assessment of turnover below Rs. 50 lakhs, rejection of books of accounts, addition on estimate basis, legal position on estimation, substantial question of law.

Assessment of Turnover Below Rs. 50 Lakhs:
The assessee, engaged in manufacturing and selling goods, argued that as per a 1991 circular, traders with a turnover below Rs. 50 lakhs were only required to maintain a register for finished goods. The counsel contended that the turnover was below the threshold, making the partial addition sustained by the first appellate authority unlawful. However, the assessing officer noted the absence of the stock register for finished goods during the survey, leading to the rejection of books and addition on an estimate basis. The Tribunal upheld the partial reduction of the addition, deeming it reasonable given the circumstances.

Rejection of Books of Accounts and Addition on Estimate Basis:
The assessing officer rejected the books of accounts due to the absence of proper records during a survey. Consequently, an addition was made on an estimate basis. The first appellate authority partially reduced the estimate, a decision upheld by the Tribunal. The court emphasized that in the absence of a stock register for finished goods, resorting to estimation was justified, as supported by legal precedents.

Legal Position on Estimation:
The court cited established legal principles regarding estimation, referencing cases like New Plaza Restaurant v. Income-tax Officer and Sanjay Oilcake Industries v. Commissioner of Income-tax. It clarified that estimation is a factual matter, and in this case, the addition made on an estimated basis was deemed reasonable. No substantial question of law arose from the impugned order, leading to the dismissal of the revision filed by the assessee.

In conclusion, the court found no merit in the revision filed by the assessee and dismissed it accordingly, upholding the impugned order.