TMI Blog2008 (10) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... d on it. We feel if this principle is followed, subsequent revision of assessment and controversy of this nature could be avoided. We therefore dismiss STRV No. 133 of 2006 filed by the assessee upholding the order of the Tribunal and restoring that of the Deputy Commissioner and allow STRV No. 480 of 2004 by quashing the order of the Tribunal and restoring that of the Deputy Commissioner issued under section 35(1) of the KGST Act. - S.T. Rev. Nos. 133 of 2006 & 480 of 2004 - - - Dated:- 7-10-2008 - DATTU H.L. C.J. AND RAMACHANDRAN NAIR C.N. AND BASHEER A.K. , JJ. The judgment of the court was delivered by C.N. RAMCHANDRAN NAIR J. The question raised in the connected sales tax revision cases, one filed by the assessee and the other filed by the State, is whether the Deputy Commissioner of Sales Tax has jurisdiction under section 35(2A) of the Kerala General Sales Tax Act, hereinafter called the KGST Act , to order reopening and revision of a best judgment assessment based on the subsequent information that pursuant to raid by Income-tax Department the assessee conceded unaccounted sales and business income based on which revised income-tax assessment was concluded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt has explained that the customers were insisting on purchase without bills to avoid payment of sales tax. In order to survive in the business in the face of stiff competition, the applicant had to accede to the request of the customers in this regard and, therefore, a certain portion of purchases and sales had to be omitted to be recorded in the relevant books of account. It is claimed that the applicant was offering the undisclosed income in the return. Based on the assessee's admission accepted in the settlement commission's order that the assessee had practised unaccounted purchases and sales and earned profit in jewellery business, the Deputy Commissioner issued orders under section 35(2A) of the KGST Act for revision of assessment originally completed and finalised in appeals. This was resisted by the assessee on the ground that since the very same issue, namely, estimation and addition to the turnover was subject-matter of appeal, the same cannot be the basis for revision of assessment under section 35(2)(b) read with section 35(2A) of the KGST Act. Even though the assessee's contention was rejected by the Tribunal holding that the basis of reopening of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 35(2)(b) read with section 35(2A) of the KGST Act based on declaration of income for assessment under the Income-tax Act. The main question to be considered is whether the Deputy Commissioner is barred from exercising jurisdiction under section 35(2)(b) read with sub-section (2A) because the estimation and addition of turnover in the original assessment was subject-matter of appeal. Of course, the Deputy Commissioner under section 35(2)(b) is barred from exercising revisional jurisdiction when assessment order was subject-matter of appeal. However, sub-section (2A) of section 35 entitles the Deputy Commissioner to exercise jurisdiction on any point that has not been decided in appeal. The question therefore to be considered is whether the issue decided in appeal in this case is the one on which revision is exercised by the Deputy Commissioner. It is clear from the facts that in the original assessment, addition was made merely because of some stock variation noticed in the course of inspection and the officer's doubt about genuineness of accounts because the turnover returned did not appear to him to be realistic compared to the value of stock-in-trade. Apart fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision of assessment to bring to tax escaped turnover even if he gets specific information about the quantum of suppression. Therefore we are of the view that in order to bar jurisdiction of the Deputy Commissioner under section 35(2)(b) read with section 35(2A), the basis for revision adopted by him should be exactly the same decided in appeal and not anything in relation to it. In other words, if the point raised by him was not the issue decided in appeal, the Deputy Commissioner is free to invoke jurisdiction. The next contention raised by counsel for the assessee is that order of assessment cannot be said to be prejudicial to the interest of Revenue and so much so the Deputy Commissioner has no jurisdiction to invoke his power. Counsel has relied on the above referred decisions of this court wherein this court has taken the view that in order to exercise jurisdiction under section 35(1) the order should be erroneous and should be prejudicial to the revenue administration. This court has further proceeded to observe that mere loss of revenue should not be the sole consideration for invoking power of revision. Special Government Pleader, on the other hand, cited the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings. But for the revisional jurisdiction exercised by the Deputy Commissioner based on information available from the income-tax records, the assessee would have evaded payment of substantial amount of sales tax. We feel if the accounts are critically examined with reference to business realities, evasion of tax could be avoided to a large extent. Normal presumption is that business is carried on for profit and the presumption gets strengthened if the assessee is in the same business for a long period. If result of accounts produced is no gain or loss for the assessee, then it is a case for critical examination of accounts by reckoning investment, recurring business expenditure and genuineness of sources of fund. Once accounts are rejected, the assessing officer is free to assume that the business is viable and profitable. Thereafter he should estimate the income which can keep the business going with reasonable profit and then project turnover based on it. We feel if this principle is followed, subsequent revision of assessment and controversy of this nature could be avoided. We therefore dismiss STRV No. 133 of 2006 filed by the assessee upholding the order of th ..... 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