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M/s Bhagwati Steels Versus Commissioner, Commercial Tax

2016 (10) TMI 783 - ALLAHABAD HIGH COURT

Assessment for the years 2005-06 and 2006-07 - dealer in iron and steel - goods purchased from Punjab and then consigned to U.P. - circular referable to the provisions of Section 8-C (3) (a) of the U.P. Trade Tax Act - the importers of steel to furnish security before obtaining the requisite import declaration forms - Held that: - While the order of assessment itself carries a recital to the effect that the statement of accounts and relevant books had been produced and upon enquiry it was found .....

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ed to hold that the assessing authority was clearly justified in rejecting the books of accounts. The Court then further finds that in both the assessment years, the amount of escaped turnover has been increased without reference to any material or record in support thereof. While it is true that a best assessment judgment undertaken by the assessing authority would necessarily entail a certain degree of guess work, the same cannot be used as a licence by the assessing authority to not base his .....

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- Levy of penalty - this court finds that the circular of the Commissioner by itself made a provision for situations like the present which stand raised in these revisions. The circular itself envisages a situation where an importing dealer incorrectly computes the security which was liable to be paid on the goods. It accordingly granted him the facility of depositing the balance amount due and payable at the time of entry of goods at the check post. The short fall if any in deposit of securit .....

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he revisionist cannot be sustained. The orders imposing penalty are therefore liable to be set aside. - Revision allowed - assessment proceedings remanded - levy of penalty decided in favor of revisionist - decided partly in favor of revisionist. - Sales/Trade Tax Revision No. 7 , 8, 9, 10 of 2011 - Dated:- 3-10-2016 - Hon'ble Yashwant Varma, J. For the Applicant : Krishna Agarwal For the Opposite Party : C.S.C. ORDER Heard Sri Krishna Agrawal, learned counsel appearing for the revisioni .....

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. It was his case that he was purchasing the said articles from a firm in Punjab, whereafter the same was transported to the State of U.P. Sri Agrawal has, during the course of oral submissions, further pointed out and clarified that apart from having offices in the State of U.P, the revisionist also had branches in other States to which iron and steel so purchased was consigned. On 20 January 2006, the Commissioner, Trade Tax, U.P., issued a circular referable to the provisions of Section 8-C ( .....

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zed. Apart from the above, the record further reveals that certain information was sought from the Trade Tax Department in the State of Punjab which submitted a report dated 26 February 2007. On the basis of the material which was gathered in the course of the search as well as the material which the Department obtained from other sources, the books of accounts as maintained by the assessee were rejected and a best judgment assessment was undertaken. Insofar as the levy of penalty is concerned, .....

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he Commissioner's circular has pointed out that the deposit of security was demanded in terms of the powers conferred upon the Commissioner under Section 8-C of the Act. He submitted that the Circular itself provided that in case it be found that the security had been incorrectly computed by the dealer concerned or that adequate security had not been paid before obtaining the form in question, the same would be recoverable at the entry check post and accounted for accordingly. He further dre .....

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7; 200/- per metric ton, according to Sri Agrawal, could have been easily demanded from the assessee and deposit thereof effected. He submits that mere wrong classification of the articles which were being imported could not lead to a conclusion that the import itself was being effected with an underlying motive to evade payment of tax. Insofar as the rejection of the books of accounts is concerned, Shri Agrawal referring to the assessment orders passed for the two years in question refers to th .....

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submits that even if the books of accounts had been rejected, the assessing authority could not in the absence of any empirical or reliable material proceed to compute the escaped turnover. He submits that the value of the estimated turnover which has been arrived at is not referable to or borne out from any material on record. Sri B.K. Pandey, learned standing counsel, on the other hand, submits that the material which was gathered during the course of search itself, coupled with the report su .....

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to A.Y. 2006-07 has proceeded to record that only computerized records were furnished before the authority and that no details or vouchers were presented. He, while referring to the circumstance that the so called branches which were established or at least said to have been established by the revisionist were found to be non-existent, submits that the Department rightly came to the conclusion that an attempt had been made to evade payment of tax, leaving the authority no option but to proceed t .....

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levant books had been produced and upon enquiry it was found that the sales and purchases had been correctly reflected and accounted for therein, the assessing authority curiously then proceeded to record that only computerized accounts were produced for his consideration. Obviously, the two are self contradictory. The Tribunal has also proceeded on the basis that the assessing authority had not recorded any satisfaction in respect of the transactions having been duly accounted for in the releva .....

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used as a licence by the assessing authority to not base his estimation on any material at all. The guess work which needs to be employed in such circumstances, must obviously be reasoned and referable to some empirical or contemporaneous material that exists or may be found by the assessing authority. The exercise, in the opinion of this Court, so undertaken by the assessing authority cannot depart from being one which is logical and fair. In view of the aforesaid facts which stand noted above, .....

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