TMI Blog2018 (12) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... and no work having been carried out in the subject year. The Intelligence Officer also did not conduct any enquiry as to the incidence of tax, which is the execution of the works contract - the penalty could only be of ₹ 10,000/- for not disclosing the receipt in the returns. A mere receipt of money, may attract liability to income tax, but sales tax could be levied only if there is a transaction of sale; which the Department has not proved in this case. The receipt alone cannot raise a presumption of taxable transaction or a computation of tax evaded. Unless there is a specific incidence of levy of tax shown, which is the initial burden cast on the Department itself, the Explanation casting only a reverse burden on the assessee ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the interior works of a Mall constructed by M/s. Gulf Asia Contracting Company. The proceedings were first taken on 12. 08. 2013 by notice read as item No. (1) in Annexure-A order in the assessment year in which the amounts were received. After the reply filed, the authorised representative is said to have appeared before the Intelligence Officer and admitted to the receipt being for contract as awarded by M/s. Gulf Asia Contracting Company by Annexure-G dated 30. 07. 2013, even prior to the notice. In response to the summons issued on 20. 07. 2013, a reply is said to have been filed wherein it has been stated that the assessee had received the same towards mobilisation advance of the contract entrusted to it. 3. The Intelligence Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Senior Government Pleader specifically pointed out that there is a clear admission as seen from Annexure-G. We notice that there is an admission that the receipt was towards a contract, but however that admission alone cannot lead to the finding that there was execution of the works contract in the subject year which alone could lead to an incidence of taxation by accretion of goods to the works. 5. The learned Senior Government Pleader has specifically referred to Rule 9 of the Kerala Value Added Tax Rules, 2005 specifically clause (1) (c) thereof, which reads as under: 9. Determination of total turnover:- ( 1) The total turnover of a dealer for the purposes of these rules shall be the aggregate ofxxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted an enquiry as to the execution and the stage to which it had proceeded. We also pertinently reiterate that the proceedings for penalty were taken in the very year in which the receipt was admitted. No such enquiry having been taken, there could be no quantification of evasion of tax as required in Section 67. On the mere ground of receipt of certain amounts towards mobilisation advance of a contract, there can be no penalty imposed alleging evasion of tax under Section 67, since there is no taxable activity carried out as such by the assessee as is detected by the Intelligence Officer. 7. This is a clear case in which the assessee, though failed to disclose the amounts in the return, had however entered the same in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of sale; which the Department has not proved in this case. The receipt alone cannot raise a presumption of taxable transaction or a computation of tax evaded. Unless there is a specific incidence of levy of tax shown, which is the initial burden cast on the Department itself, the Explanation casting only a reverse burden on the assessee cannot be resorted to. 9. The reliance placed is also on the return filed by the awarder and the deduction of tax made at source. We notice that the awarder having passed on the money to the contractor, he could not wait for deducting tax after the contract is executed. On payment of money, the awarder definitely deducts tax and pays it to the Government and the levy on the awardee would be only when th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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