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2016 (7) TMI 881 - ALLAHABAD HIGH COURT

2016 (7) TMI 881 - ALLAHABAD HIGH COURT - TMI - Rejection of books of accounts - demand of sales tax - evasion of tax - Held that:- both the assessing authority as well as Tribunal have failed to discharge this statutory obligation which stood placed upon them. All that the two authorities have done is to assess the revisionist on the basis of the rough/provisional balance sheet which was found in the premises during the course of survey. This, in the opinion of the Court, does not comply with t .....

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rder passed by the Trade Tax Tribunal upholding an order made by the assessing authority rejecting the books of accounts of the assessee and consequently coming to hold that tax has been evaded in respect of the sale of jute bags valued at ₹ 20,00,000/-. The disputed tax liability was pegged as ₹ 1,20,000/-. The undisputed facts appear to be that the revisionist, who is a registered dealer under the provisions of the U.P. Trade Tax Act, 1948 Act was engaged in the manufacture of jute .....

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ct books of accounts had been maintained and it is on the basis of audited accounts that the tax had been paid for the relevant assessment year. The assessing authority took note of an apparent discrepancy and variance between the rough/provisional balance sheet and audited accounts on the basis of which self assessment, tax was deposited by the revisionist. The Court finds that the order of the assessing authority was based entirely on the rough/provisional balance sheet which is stated to have .....

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opinion as contemplated under Section 7(3) did not exist and therefore, the rejection of books of accounts was clearly illegal. He has further submitted that the self assessed tax which was paid by the revisionist on the basis of the audited accounts was not disputed by the State. It was contended that unless the respondents had come to a conclusion that the audited accounts was not worthy of credence, tax could not have been imposed on the basis of the rough/provisional balance sheet. Learned S .....

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rovision reads as follows: "If no return is submitted be the dealer under sub-section (1) within the period prescribed in that behalf or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such inquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof : provided that before taking action under this sub-section dealer shall .....

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se, the dealer had filed returns. The returns as well as the self assessed tax have been faulted by the respondents solely on the ground that the audited accounts were at variance with the balance sheet which was found in the business premises during the course of survey. This in the opinion of the Court would not justify the rejection of books of accounts maintained by the dealer for more than one reason. A reading of the order of the assessing authority as well as the Tribunal indicates that n .....

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oks of account of a dealer cannot be the outcome of a on whimsical or capricious exercise of power. More fundamentally, this Court finds that in terms of sub-section (3) even if the assessing authority were to arrive at a conclusion that the returns were incorrect and incomplete, it was further obliged to undertake an enquiry to "determine" the turnover of the dealer to the "best of his judgment". When the provision employs the words "determine" and "best of hi .....

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