9911796707
TMI Blog2007 (10) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... r-assessee on April 3, 1985 and submitted a report. It is alleged that although the said report was available with the assessing officer prior to passing of the regular order of assessment under section 12(4), the self-same vigilance report was used as the basis for initiation of a proceeding of suo motu revision under section 12(8) of the Act, which concluded with a finding that the petitioner has suppressed transaction amounting to Rs. 11,000 for which, the turnover of the petitioner was enhanced by Rs. 2,00,000, consequently, raising additional tax demand of Rs. 20,000 and further amount of Rs. 20,000 was levied by way of penalty under section 12(8) of the Act. The petitioner challenged the aforesaid suo motu revisional order in appeal. The first appellate authority while affirming the order passed under section 12(8) of the Act regarding suppression and enhancement of turnover and the consequential demand of tax, reduced the penalty levy from Rs. 20,000 to Rs. 10,000. The petitioner further challenged the first appellate order before the Sales Tax Tribunal and by order dated May 20, 1993, the Sales Tax Tribunal dismissed the appeal and confirmed the order passed by the first ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pported the order passed by the Tribunal and submitted that the questions of law framed in the present case ought to be answered in negative and in favour of the Revenue since "suppression" has been proved in the present case and further that the authority has the jurisdiction to levy penalty up to one and half times of the tax imposed originally. He submitted that there was no jurisdictional error in levying penalty which has been reduced to 50 per cent of the amount demanded by the first appellate authority. Therefore, he submitted that no case for interference of this court has been made out by the petitioner. Mr. Kar further submitted, if the court finds that there has been "suppression" on the part of the assessee, then the court ought not to interfere with the amount of penalty levied unless and of course it is held to be "capricious and arbitrary". According to Mr. Kar, the impugned orders would clearly indicate that the authorities have exercised their power judiciously and therefore, the present revision merits no consideration. From a perusal of the records of the present proceeding and in particular, the order passed under section 12(8) of the Act, it appears th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accounts were available and the finding is that there were no other accounts and the secreted accounts were exhaustive, there was no scope for making a further estimate of the suppressions de hors the genuine accounts seized. Law is now wellsettled that estimate of suppression must bear a reasonable nexus to the materials available. Merely because a dealer or assessee is found to have made certain suppressions the assessment cannot be raised to any extent as a punitive measure. . . . ." Therefore, in order to ascertain as to whether there is any "reasonable nexus" between the materials available and the materials under suppression, it is required to verify the Vigilance report noted herein above in detail. Three slips were detected in course of visit of the Inspector of Vigilance Department. Slip No. 1: Pertains to the alleged failure on the part of the petitioner to enter purchase of certain goods in the books of account. In other words, it is alleged that whereas the petitioner had purchased 26 pieces of tyres, he had accounted for only 10 pieces in his books of account thereby leaving the balance 16 pieces of purchased goods un-accounted for. To a query made to the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted purchase, the authorities would have been right to take a view that the assessee was taking recourse to such transactions repeatedly" and therefore, answered the question of law "Whether, on the facts and in the circumstances of the case, the enhancement of the returned gross turnover by 25 per cent is arbitrary?" in favour of the assessee holding that if the enhancement had been twelve and half per cent, their Lordships would not have regarded the same as arbitrary. The next aspect for determination relates to the levy of penalty. In the present case originally penalty of Rs. 20,000 was levied by the assessing officer, i.e., the amount equal to the additional tax demanded in section 12(8) proceeding, has been reduced to Rs. 10,000 by the first appellate authority. In the present revision we are concerned with the assessment for the year 1982-83. The provisions under section 12(8) of the Act at the relevant time are quoted herein below: "12(8): if for any reason the turnover of a dealer for any period to which this Act applies has escaped assessment or has been under assessed or where tax has been compounded when composition is not permissible under this Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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