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Emelson Agencies Versus Commissioner of Trade And Taxes, Delhi

2015 (9) TMI 158 - DELHI HIGH COURT

Increase of Turnover and tax liability – Best judgment assessment – AO held that two challans, showing sale of goods to certain dealers could not be explained as Assesse had neither produced relevant sale records nor entered sales reflected in said challans in sales tax account registers – Appeal preferred by Assessee was also rejected – Held that:- order passed by Appellate authority and tribunal does not consider any of Assessee’s contentions – Clearly, two challans cannot be basis for rejecti .....

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commission received/receivable by Assessee – Assessment Order does not indicate any basis for AO to enhance turnover by 10% – Matter remanded to AO to decide afresh in accordance with law – Decided in favour of Assesse. - ST APPL No. 32/2014 - Dated:- 21-7-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellants : Ms Prem Lata Bansal, Sr. Adv. with Mr Ruchir Bhatia, Adv. For the Respondent : Mr Satyakam, Additional Standing Counsel for GNCTD ORDER 1. This is an appeal filed by the Assessee .....

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essee impugning the assessment order dated 4th February, 2000 passed by the Assessing Officer ('AO ) pertaining to the Assessment Year 1996-97. 2. Briefly stated, the relevant facts leading to the present appeal are as under:- 2.1 During the relevant year, the Appellant (Assessee) was engaged in the business of distribution of paints and other products on behalf of M/s Asian Paints Ltd. as a consignment sale agent. The Assessee has placed a copy of the Consignment Agreement with Asian Paints .....

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e assessment year 1996-97. The AO held that the Assessee was confronted with the papers seized by the enforcement branch during the survey and the Assessee could not properly explain the same. The AO held that two challans, being challan no. 1435 dated 1st October, 1996 and challan No. 1439 dated 1st October, 1996, showing sale of goods to certain dealers could not be explained as the Assessee had neither produced the relevant sale records nor entered the sales reflected in the said challans in .....

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asis of the aforesaid findings/observations, the AO proceeded to frame a best judgment assessment by enhancing the declared sales by 10% and assessing the tax accordingly. Thus, the sales were enhanced by ₹ 2.5 crores. Penalty proceedings were directed to be initiated separately. 2.5 The Assessment order was challenged before the FAA on several grounds. The Assessee asserted that it was never confronted with the loose papers, documents, registers, diaries, notebooks etc. as recorded in the .....

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the finding regarding the two challans is concerned, the Assessee claimed that it was confronted with the said challans on the last date of hearing and as such did not have any opportunity to reconcile the said challans with the sales. In respect of the finding that the Assessee had not produced the trading account, it was contended by the Assessee that since sales were made on behalf of its principal, trading account was not maintained. In addition, the Assessee urged that it had produced the .....

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in the same. 2.6 The appeal preferred by the Assessee was rejected by the FAA. The FAA held that there was sufficient proof on record to show that the Assessee was confronted with papers seized by the survey team on 3rd October, 1996 and the stocks in excess of ₹ 2.49 lacs at the business premises at Patparganj could not be explained despite several opportunities. The Assessee s appeal before the Tribunal also met the same fate. 3. The principal contention urged on behalf of the Assessee i .....

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essee had explained to the enforcement team at the time of the survey that the said challans were dated 1st October 1996 and had not been entered in the books as 2nd October 1996 was a national holiday and the same would have been entered on the next working day i.e. 3rd October 1996 - the date of the survey. It is contended that this explanation has also not been considered by the AO. 4. A plain reading of the order of the FAA and the Tribunal indicates that the Assessee s contentions have not .....

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allans amounting to ₹ 1, 250/- cannot be the basis for rejecting the Assessee s books and increasing the taxable turnover by ₹ 2.5 crores, particularly, when the Assessee s turnover is to the extent of ₹ 25 crores. The Assessee has produced a copy of the Consignment Agreement with Asian Paints Ltd. The same indicates that the Assessee had agreed to sell the goods consigned by its principal - Asian Paints Ltd., as its agent, on terms and conditions specified by the principal. Th .....

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d. At any rate, the Assessee was not obliged to maintain one. The AO has enhanced the turnover principally on the basis that the Assessee had failed to produce the Trading Account as on 3rd October 1996 and 31st March 1997. The issue - whether the same was at all necessary, has been completely ignored by the FAA as well as the Tribunal. 6. Although the AO has enhanced the turnover by ₹ 2.5 crores, on the basis of excess stock allegedly found that the premises of the Assessee, the AO has no .....

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