TMI Blog2021 (3) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded a finding that it is not reasonable and justified on the facts and circumstances of these cases to treat the transactions recorded in the documents seized from a third party (Sri Santosh Jha) as the transactions of the assessee without there being any indication to such effect in such seized documents against such of the entries relating to such transactions and further recorded a finding that though the large number of purchase transactions reflected in the seized documents have been treated as the assessee s suppressed turnover and simultaneously when a large number of sales turnovers reflected in such documents have also been considered as suppressed turnover without treating any part of such suppressed sales turnover to be from out of the suppressed purchase turnovers and held that even a small percentage of the suppressed sales are from out of the suppressed purchases. There is no justifiable reason for the FAA to have considered 40 percent of the transactions relating to Sri Santosh Jha with his other clients as the appellant s transactions based on the documents seized from the premises of Sri Santosh Jha. In the documents seized from Santosh Jha s premises, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and subsequent to the inspection, the Commissioner of Commercial Taxes issued assignment to the Prescribed Authority to undertake re-assessment of the respondent for the tax period from April, 2005 to October, 2006. Accordingly, after issuing the proposition notices and considering the objections filed by the assessee, the Prescribed Authority has passed the impugned common reassessment order dated 18.4.2011 exercising power under the provisions of Section 39(1) of the KVAT Act and passed the consequential order of penalty and interest. Aggrieved by the re-assessment order, the respondent preferred appeals before the Joint Commissioner of Commercial Taxes (Appeals)-2, Bangalore in VAT-APNos. 723 to 741/11-12 under the provisions of Section 62(6) of the KVAT Act 2003. The Appellate Authority considering the entire material on record by the order dated 9.11.2012 allowed the appeals in part and directed the Deputy Commissioner of Commercial Taxes (Enforcement)-2, South Zone, Bangalore to re-calculate/recompute the penalty and the interest payable and work out the actual balance of tax payable by the respondent after affording credit to the payments made by the respondent after 1.1.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons? 5. We have heard the learned counsel for the parties to the lis. 6. Sri Vikram Huilgol, learned Additional Government Advocate appearing for the petitioners State contended that the impugned order passed by the Tribunal allowing the appeal in part and directing the Prescribed Authority to recompute the taxable turnover on the basis for the tax periods from April 2005 to October 2006 and recompute the penalty and interest afresh is erroneous, cannot be sustained and liable to be set aside. He further contended that the Tribunal erred in recording the finding that common seizure order was passed by the Enforcement Order for two different premises belonging to two different juristic persons is totally erroneous for the reason that the incriminating material was seized from the declared places of business of the respondent as finding of the Tribunal as declared at Annexures-A and B. The finding of the Tribunal that a common seizure order was passed b the Inspecting Authority and there was certain lapses in the procedure adopted in the seizure order cannot be a ground to reject the substance of the seizure order and to utilize the same at the time of assessment. The techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnovers arrived at from the remaining seized documents are not disclosed to the appellant in the said notice, with the result that the assessee was effectively disabled from offering any meaningful explanation in relation to such estimates in the pre-assessment notice. Inspite of written request by the assessee, the Assessing Authority did not furnish copies and there was no opportunity given to the assessee to furnish explanation. Therefore, the Appellate Authority considering the irregularities committed by the Assessing Authority while issuing notice and the entire material on record, passed the order on 9.11.2012 allowing the appeals in part directing the Deputy Commissioner of Commercial Taxes (Enforcement)-2, South Zone, Bangalore to re-compute the penalty and the interest payable on the above basis and also work out the actual balance of tax payable by the appellant after affording credit to the payments made by the appellant after 1.1.2007 and issue revised demand notice for such actual balance of tax demanding the penalty and the interest on the basis of the balances as on 30.4.2006 and 30.11.2006. The said order passed by the Appellate Authority was not challenged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, which inter-alia also relate to the tax period from April 2005 to October 2006 has been passed on 18.4.2011 after the amendment to Section 40(1) of the KVAT Act 2003 reducing the limitation period to four years from the end of the concerned tax period, such amendment is applicable to the impugned re-assessment order and that under the said amended provisions, the impugned re-assessment orders for the tax period from April 2005 to October 2006 are barred by limitation of four years limitation and further contended that the re-assessment orders have been framed on the basis of presumptions rather than on facts and also in contravention of the principles of natural justice and raised various grounds. 10. The 1st Appellate Court considering the entire material on record has recorded a finding as under: The volume of the documents seized by the Respondent in this case is huge, as many as 3138 written pages of information is contained in the various seized documents. These documents were seized on 31.10.2006. The processing of these documents was taken up by the Respondent between 10.06.2010 and 11.08.2010 on 37 different dated, and the details of verification of seized docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence on record to prove that the secret books of account, seizure of which was effected by or under the orders of the Inspecting Assistant Commissioner, were recovered from a place which formed part of the business premises of the respondents or was in their exclusive possession and control. The members of the inspecting party themselves have admitted that the books were lying on the table in the room adjacent to the show-room of the respondents or not. It is also not denied by the prosecution that the said room is accessible through Kallupalam Auto Stores also. That apart no cogent and convincing proof has been adduced by the prosecution to establish that the books of accounts were maintained by the respondents or that they had any link or connection with them. It is true that there are certain entries in the secret books of accounts which tally in some respects with the books of accounts intended of official purposes which were produced by the respondents in response to the demand made by the Inspecting Assistant Commissioner which raises a strong suspicion against the respondents but that circumstances alone is not sufficient to warrant their conviction for the afores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch transactions? (3) In the circumstances where a large number of purchase transactions reflected in the seized documents have been treated as the appellant s suppressed turnover and simultaneously when a large number of sales turnovers reflected in such documents have also been considered as suppressed turnover without treating any part of such suppressed sales turnover to be from out of the suppressed purchase turnovers, is it reasonable and justified to hold that not even a small percentage of the suppressed sales are from out of the suppressed purchases? (4) If any of the above issues are answered in favour of the appellant, whether relief in respect of consequential penalties and interest is admissible to the appellant? 12. On considering the entire material on record, the Tribunal recorded a finding that the Assessment Authority is not justified in passing the assessment order in respect of the documents seized from two different premises belonging to two different persons who are not directly connected with each other without mentioning which document is seized from which place and further recorded a finding that it is not reasonable and justified on the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t s suppressed turnover 10807988 After excluding the above transactions in the documents seized from Sri. Santosh Jha s premises, there are transactions recorded in those documents which total up to ₹ 5,11,25,591-00 against which some other code names other than that of the appellant are recorded or in respect of which there is no mention at all of any name in the seized documents. There is no sensible reason as to why any part of such transactions should be treated as the appellant s suppressed transactions. Nevertheless, without furnishing any tenable reason whatsoever, the FAA has treated 40% of the aforesaid extraneous transactions of ₹ 5,11,25,591-00 as the appellant s suppressed turnover (such suppressed turnover based on such documents has been quantified in the impugned appeal order at ₹ 2,04,50,237-00). This addition to the appellant s suppressed turnovers in the impugned common appeal order passed by the FAA cannot be sustained legally having regard to all the facts and circumstances explained supra. 13. Accordingly, the Tribunal allowed the appeals in part relying upon the dictum of the High Court of Madras in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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