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2016 (7) TMI 585 - GUJARAT HIGH COURT

2016 (7) TMI 585 - GUJARAT HIGH COURT - TMI - Enhancement of assessment - AO enhanced the sales and purchases of the respondent three times the figures of the alleged suppression besides considering the purchases from Sureshkumar Tulsidas as purchases from unregistered dealer. - Tribunal deleted the enhancement made. - Held that:- Even in the present case, the respondent had not been given the opportunity of cross examining the said dealers or rebutting the averments made by them in their affida .....

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NVISH BHATT, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. The applicant - State of Gujarat under Section 69 of the Gujarat Sales Tax Act, 1969 made an application before the Tribunal to refer to this Court a question of law arising out of Tribunal s judgement and order dated 21.07.1988 in Second Appeal Nos. 63 & 64 of 1986. Accordingly, a statement of case was drawn on 09.08.1995 referring the following question of law by way of Reference Applications No. 11 & 12 of .....

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) of the Gujarat Sales Tax Act, 1969 and whether the Tribunal has erred in appreciating the evidence and the decision is perverse and bad in law? (2) Whether on the facts and in the circumstances of the case, Gujarat Sales Tax Tribunal was right in partly allowing the Second Appeal for the period S.Y. 2036 and amending the order passed by the learned Sales Tax Officer and the learned Assistant Commissioner of treating purchases from M/s. Sureshkumar Tulsidas of Khambalia made by the present opp .....

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rs of the Sales Tax Department at the business premises of the dealer on 12.02.1979 and 06.07.1979 when some books of accounts and other materials were seized. The Sales Tax Officer issued two show cause notices dated 17.02.1981 and 04.11.1981 requiring the respondent to show cause as to why the turnover of purchases and sales of the present respondent should not be enhanced due to certain discrepancies in the account books alleged to have been found as a result of the verification of the accoun .....

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y allowed the same. The appellate authority however dismissed the appeal qua purchases from Sureshkumar Tulsidas and therefore the respondent preferred Second Appeal before the Tribunal. The Tribunal allowed the second appeals and held that the said purchases should be treated as purchases from registered dealers. Being aggrieved by the same, the State of Gujarat preferred Reference Application for referring the question of law to this Court. 4. Mr. Hardik Vora, learned AGP appearing for the Sta .....

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2036, the Tribunal has not considered the aspect of non production of transport receipt, octroi receipt etc. 5. Learned advocate appearing for respondent supported the impugned order and submitted that the same having been passed in accordance with law does not call for any interference by this Court. 6. Having heard learned advocates for both the sides we are of the opinion that the Tribunal has rightly deleted the enhancement made. The respondent was not allowed to cross examine the deponents .....

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e law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi- judicial functions and they are bound to observe principles of natural justice in reaching their conclusions. It is true, as pointed out by this Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income Tax, West Bengal(1) that a taxing officer "is not lettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted a .....

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that "the rules of natural justice are not embodied rules" and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel v. Duke of Norfolk and Ors. (3): "There are in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acti .....

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unheard. It is indeed a requirement of the duty to act fairly which lies on all quasi judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because, as pointed out by this Court in A.K. Kraipak and Ors. v. Union of India,(1) "the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice" and justice, in a society w .....

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e law under which it is held, the constitu- tion of the authority holding the inquiry, the nature and character of the rights affected and the consequences flow- ing from the decision. It iS, therefore, not possible to say that in every case the rule of audi alterem partem requires [that] a particular specified procedure to be followed. It may be that in a given case the rule of audi alterem partem may import a requirement that witnesses whose statements are sought to be relied upon by the autho .....

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d if at this stage he is given a full-fledged 'hearing including the right to summon and cross-examine witnesses, then this would amount to condoning the default committed by the assessee. It was also argued that as the Income-tax authorities are not bound by the technical rules of evidence, the assessee cannot claim cross-examination of witnesses as a matter of right. In support of his submission he relied upon a decision of this Court in Dhakeswari Cotton Mills Ltd v. Commissioner of Incom .....

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ear that in making the assessment under sub- section (3) of section 23 of the Act, the Incometax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23 (3)." There can be no doubt that the principle that as the tax proceedings are of quasi-judicial nature, the Sales Tax authorities are not strictly bound by the rules of evidence w .....

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nt or a material in evidence is quite different from the value which the authority would attach to such material. The Privy Council has held that the Taxing Authorities can even base their conclusion on their private opinion or assessment provided the same is fully disclosed to the assessee and he is given an opportu- nity to rebut the same. In these circumstances, therefore, we do not agree with Mr. Gupte that merely because the technical rules of evidence do not strictly apply, the right of cr .....

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