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TMI Blog2022 (2) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances leading to the final common order made by the Tribunal in the Tax Appeals referred to above. The counsel consent to disposing of the revisions by this common judgment. O.T. Rev. No. 40 of 2018 3. The dealer is incorporated as a Private Limited Company under the Companies Act, 1956. The dealer on 01.12.2009 had taken registration under the Act and was engaged in trading Cosmetics, Computer Printers, Electronic and Electrical items, Watches, Garments, Textiles, Household articles etc. On 30.04.2010 the Intelligence Officer, Squad No. II, Department of Commercial Taxes carried out inspection of the premises of the dealer where the business, narrated above, was being undertaken. The Intelligence Officer has taken possession of books of accounts, ledgers, documents etc. from the dealer. Thereafter, referring to a few omissions and commissions, warranting action under Section 67 of the Act, since are noticed, penalty proceedings were initiated under Section 67 of the Act. The insinuation or circumstances which constituted penalty proceedings, stated precisely, are categorized under the following three heads: "i) The petitioner claimed exemption of Rs. 3,11,70,760/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Lakhs i.e., 1000% of the investment within shortest span of time extending from one month to maximum of 5 years. The product package details offered by the company are as follows. Sl.N o. Product Combination Price offered by the company Chain site & Board status Binary Starter Kit Packages 1 Power X+ premium Suit Length 5490 One Binary Site 2 Open Cooking oven +Premium suit length 6790 " 3 Pureit water Purifier + Premium Suit Length 6890 " 4 Dish TV STB + Premium Suit Length 6590 " CB Revenue Sharing Pool Packages 1 OC Oven [1 No.] + Pureit [1 No] + Power X [1 No] + Suit Length [3 No.'s] 19170 One Binary Site + One Board Site 2 Dish TV [1 No] + OC Oven [2 Nos.] + Suit Length [3 Nos.] 20170 " 3 OC Oven [1 No.] + Pureit [ 1 No.] + Dish TV [ 1 No.] + Suit Length [ 3 No.'s] 20270 " 4 OC Oven [3 No's] + Suit Length [3 No.'s] 20370 ": 5 Digitron Inverter [1 No.] + Suit Length [1 No.] 26490 " 6 Metlife Insurance [Only Nationalised Bank DD] 25000 " 7 Wipro Laptop [1 No.] + Suit Length [1 No.] 36990 " xxx xxx xxx The real magnet for luring in people is the elaborate matrix of rewards that can only be corned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the Company submits the following explanations. i. The said receipts are only advances received by the Company and the consequent Sales were only effected after 01-04-2010 ii. Initially Company plans to market Insurance Products, Tourism Packages and other service oriented products and hence received advance amounts. iii. Our customers are from various parts and they have come to our place of business to take delivery of goods and hence the time gap between advance and sales. iv. It is proposed to arrive the alleged suppression by treating the entire turnover as assessable @ 12.5% whereas the Company is also dealing in items taxable@4% The explanations i to iv made by the Company have been considered at length with due attention to the returns filed, seized records, registration particulars, books of accounts produced and is decided accordingly on the merits as under xxx xxx xxx It has been explicitly proved that the Company is having parallel transactions involving substantial amounts which are not documented in any of the accounts produced. For the reasons stated above, the accounts subsequently produced on 25-05-2010 which does not represents true record of bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer has been confirmed by the Deputy Commissioner (Appeals) in Annexure-B order dated 22.06.2011, and by the Tribunal in Annexure-I order dated 30.12.2017. The Tribunal examined the imputation against the dealer, its reply, and detailed consideration of the conclusions recorded by the Intelligence Officer and confirmed the findings on all the three categories. The conclusions now confirmed by the Tribunal are findings of fact. By prioritizing his arguments, Adv. Harisankar V. Menon, at the outset, argued on non-disclosed turnover between 26.06.2009 to 30.11.2009 and suppression of turnover during the period 01.01.2010 to 31.03.2010. 4.1. The contentions urged challenging the levy of penalty on account of alleged suppression of sale and unaccounted sales are either extension or refinement of reply given by the dealer. We would have taken the trouble of referring to the refined contentions now made, had it been a case where the contentions would lead us to examine, whether, while recording conclusions against the dealer, there has been illegality or infirmity warranting interference by this Court. In other words, the contentions now canvassed by the dealer are not pointing out a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax or other amount evaded or sought to evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case." When action is initiated under Section 67 of the KVAT Act for defects/offences mentioned in clauses (a) to (I), it is to be noticed that the authority is clothed with the power to impose, by way of penalty, an amount not exceeding twice the amount of tax or other amount evaded or sought to be evaded, where it practicable to quantify the evasion or in any other case, Rs. 10,000/-. It is pertinent that in imposing penalty at twice the tax evaded or sought to be evaded, it should be practically possible to determine and quantify the amount evaded or sought to be evaded. This does not contemplate any estimation, however reasonable it may be, since the same would be in the realm of "best judgment", of, an individual-authority. 9. The multi-point levy as contemplated under the KVAT Act provides for assessment under Chapter V. Section 21 provides for self assessment by filing of a return under Section 20 in the prescribed manner and accompanied by the prescribed documents. This is in consonance with the scheme of multi-point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding out as to whether the evasion detected would in fact lead to an inference of earlier or subsequent evasion. Nor can such inferences regarding the earlier or subsequent conduct be reflected in the penalty proceedings by way of estimation of turnover based on such inferences. This, going by the clear words employed in the Statute, is within the realm of the assessment proceedings." He prays for setting aside the penalty imposed on the basis of estimation. 6. Mr. Shamsudheen contends that the dealer was doing business in multilevel marketing. From the order of the Intelligence Officer, it is clear that the dealer was selling combo packages, one taxable item with a tax exempted item. The Intelligence Officer has not decided the turnover under this head either on estimation or conjunctures. By inviting our attention to the sale of Wipro Laptop and a Suit Length, noted above, he argues that the suppression of turnover is in the apportionment by the dealer while generating the invoice. It is not the MRP that is the deciding factor, it is the fudging of amount in a non-taxable item. In the case on hand, the turnover details, apportionment, calculation of profit, everything has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation; an approximate judgment or opinion as a rough or an accurate calculation, or measurement. A statement, generally in writing, specifying the amount of money for which a contracting party will perform certain work or supply certain goods or building estimate. An offer is not less binding for being in the form of an estimate and headed estimate.' OR 8.1. To judge and form an opinion of the value, from imperfect data, (to fix the worth of) roughly or in a general way, to form an opinion of, as to amount, number etc from imperfect data, comparison or experience; to make an estimate of; to rate; to calculate roughly; to assess. A synonym used in general parlance is 'guess', meaning estimate without calculation or measurement, form hypothesis about. A word including both the meanings is 'Guestimate', a colloquial term meaning an estimate that is based largely on intention or guess work [see P.R. AIYAR's Advanced Law Lexicon] 9. The question, in the case on hand, is whether in a narrow conspectus or in a broad perspective, the Intelligence Officer had estimated or guessed what could be or what might be the suppressed turnover through apportionment of tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons why the plea cannot be accepted. No valid material has been placed before us to justify a remand. Based on a bare statement, the plea cannot be accepted. 24. Now coming to the appeal for the month of April 2010 (2010-11 - VAT 1486/2011), it can be seen that the Intelligence Officer has arrived at the tax sought to be evaded amounting to Rs. 14,58,345/- as follows: "The tax liability of the Company for the year 2009-10 as arrayed in para 10 -C, D and F is consolidated as under:- Sl.No Particulars Taxable @ 4% Taxable @ 12.5% Total Turnover Total Output Tax Liability Turnover Tax Turnover Tax I Suppressed Taxable Turnover April 2010 - By misclassification 236789 9472 6986145 873268 7222934 882740 II Taxable Turnover during the Month of April (conceded + suppressed) 663490 26540 7517720 939715 8181210 966255 III Taxable Turnover on account of stock variation 124953 4998 368827 46102 493780 51101 IV Total Sales Turnover - Suit Length + Shirting fixed 0 0 0 0 1321896 0 1 TOTAL 17219820 1900096 2 Less Input Tax Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rregularities found at the time of inspection of the business place which we have referred above, the Intelligence Officer has also pointed out at page 7 of the penalty order for the year 2009-10 that the assessee represented by the Managing Director Sri. A. Narayanankutty and the Director Sri. K.B. Mohammed Azaraf has deliberately filed false and untrue affidavit before the Registering Authority of the Commercial Taxes Department. The assessee also failed to furnish the stock inventory and the unaudited financial statements for the year 2009-10 which the company had published in the Malayala Manorama News Paper on 25.05.2010. Considering all the facts stated by the Intelligence Officer in the orders of penalty, we are of the view that the Intelligence Officer was justified in initiating penalty proceedings against the assessee u/s. 67(1) of the Act. Levy of maximum penalty is also justified considering the serious nature of the irregularities pointed out. As stated earlier, the first appellate authority was justified in interfering with the orders of penalty. We do not find any merit in the appeals filed by the assessee and the Revenue. In the result, the appeals fail and stand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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