Noor Mohammed v. The State of Tamil Nadu

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 21.09.2012CoramThe Honourable Mrs.Justice CHITRA VENKATARAMANandThe Honourable Mr.Justice K.RAVICHANDRABAABUTax Case (Revision) No.1731 of 2008---A.Noor Mohammed ...Petitioner -vs-The State of Tamil NaduRep. By the Commercial Tax OfficerVirudhachalam ...RespondentTax Case (Revision) filed under Section 38 of the TNGST Act of1959 to revise the order of the Sales Tax Appellate Tribunal(Additional Bench), Madras dated 27th July 1993 passed inT.A.No.693/92 which was preferred against the proceedings ofAppellate Assistant commissioner(CT) Cuddalore dated 4.5.1992 made inAppeal No.36/92 preferred against the proceedings of the CommercialTax Officer, Virudhachalam dated 10.12.1991 made in TNGSTNo.587593/89-90 for the assessment year 1989-1990.For petitioner:Mr.S.SivanandamFor respondent : Mr.A.R.JayaprathapGovernment AdvocateO R D E R(The Order of the Court was made byCHITRA VENKATARAMAN, J.)The assessee is on revision as against the order of the Sales TaxAppellate Tribunal (Additional Bench), Madras dated 27th July 1993passed in T.A.No.693/92 relating to the assessment year 1989-90,questioning the re-assessment made in violation of the principles ofnatural justice and as against the 11 times addition made raising thefollowing questions of law:-"1. Whether the Tribunal is right in denyingopportunity of cross examination of third partypurchasers when the dealer denied the transactionsin reassessment proceedings, under the circumstancesthe employee of the dealer stolen away cash billbooks cheque books etc., and the dealer gave https://hcservices.ecourts.gov.in/hcservices/ complaint to the police and to the Lakshmi VilasBank, Neyveli ?2. Whether the Tribunal is right in confirmingeleven times addition when the entire alleged salebills were taken and estimated in reassessmentproceedings ?"2. A perusal of the order of the re-assessment shows that theassessee was originally assessed on the taxable turnover ofRs.1,03,415/- and Rs.8,418/- respectively. The assessment was soughtto be reopened subsequently alleging that the assessee had sold10.050 Kgs. of MS Scrap commercial scraps and Casting Scraps forRs.45,060/- to Sri Balaji Steel Industries, Nethimedu as per saleBill No.1651 dated 19.07.1989. The assessee was called upon toproduce books of accounts for rechecking. The assessee requestedtime but failed to produce the books of accounts. In thecircumstances, taking Bill Nos.511 and 1651 dated 10.08.1989 and19.07.1989, the Assessing Officer reopened the assessment and infixing the turnover, made 11 times addition of the sales for onemonth and estimated the turnover at Rs.12,31,500/- taxable at 4%.The assessee filed a petition dated 07.12.1990 in response to thenotice dated 19.11.1991 and sought time to file detailed objectionsand appear in person before the Officer. He further stated that hehad no cash or credit transactions with the Salem or Chidambaramdealer. The assessee pointed out that on account of his ill-health,he could not attend the hearing. The claim of the assessee washowever rejected and the order was made on 10.12.1991 confirming theproposal to assess the said turnover and levied penalty under Section16(2) of the Tamil Nadu Geneal Sales Tax Act, 1959. Aggrieved by thesame, the assessee filed appeal before the Appellate AssistantCommissioner. 3. Referring to the assessment order for the year 1986-87 and thereopening of the assessment for the said year, the First AppellateAuthority viewed that the assessee was in the habit of selling oldiron by issuing duplicate bills. The First Appellate Authority heldthat the assessee had not produced the books of account forrechecking and the assessee issued duplicate bill Nos.1903 dated03.04.1989, 1954 dated 17.05.1989, 1659 dated 12.07.1989 and 1651dated 19.07.1989. Thus Bill Nos.1904 to 1953 would have been issuedbetween 03.04.1989 and 17.05.1989. With that view, the AppellateAssistant Commissioner confirmed the assessment. The assessee wenton further appeal before the Sales Tax Appellate Tribunal. 4. The assessee contended that one of its employees had taken andran away with the books of accounts and police complaint waspreferred against him and the same complaint was also given toLakshmi Vilas Bank, Neyveli. In the background of the said facts,the assessee could not file regular account maintained by him insupport of his contentions. Pointing out to this, the Sales Tax https://hcservices.ecourts.gov.in/hcservices/ Appellate Tribunal held that the circumstances indicated that theassessee was avoiding production of books before the AssessingOfficer. Thus, it confirmed the assessment. Aggrieved by this, theassessee is before this Court. 5. Learned counsel for the assessee disputing the claim of theAssessing Officer that he had credit transactions with dealers inSalem and Chidambaram, pointed out that only on account of sickness,the assessee could not appear before the Assessing Officer. Further,an employee of the assessee one M.Pichai ran away with books ofaccounts and complaint was also made. Countering the addition,learned counsel submitted that there are no materials for theTribunal to sustain the 11 times addition. 6. A perusal of the order of reassessment shows the assertion ofthe Assessing Officer that Bill No.1651 dated 19.07.1989 had not beenbrought for assessment. There are hardly any material tosubstantiate where from the said bill was taken and whether the samewas considered during the time of original assessment. The orderdiscloses no materials or even an inspection conducted resulting into sustain the reopening of the assessment. It is further pointedout that the assessment order itself is based on final sale BillNo.511 dated 10.08.1989. However, the Assessing Officer presumedthat the assessee had not produced sale bill No.1651 dated19.07.1989, which was issued to Salem dealer and Bill Nos.1659, 1954and 1903 issued to Chidambaram dealer. Taking these two bills, theAssessing Officer estimated the actual suppression at Rs.1,02,625/-and made further addition at 11 times. This order of the AssessingOfficer was sustained by the Appellate Authorities.7. We find that in the reassessment proceedings, the Officerwithout disclosing the basis, embarked on assessing the turnover asan escaped assessment. It is no doubt true that the assessee had notproduced books of accounts before the Officer, for which, theassessee had given valid reason that because of his ill health, hecould not appear on 07.12.1991 in respect of the notice dated19.11.1991 regarding reassessment. Without even a verification andconsidering the prayer for adjournment, the reassessment order seemsto have been made on 10.12.1991, which itself is a violation ofprinciples of natural justice. 8. As already pointed out that the reasoning of the FirstAppellate Authority rests on the results of the assessment for theyear 1986-87. When the appeal before the First Appellate Authorityrelated to 1989-90, we do not understand the relevance of 1986-87 forreopening of the assessment of the year 1989-90. The Sales TaxAppellate Tribunal confirmed this order. On a overall reading of theorders of the assessment and the appellate order, it is seen thatnone of the authorities had discussed as to the source of these bills https://hcservices.ecourts.gov.in/hcservices/ and how the said bills were related to the assessee. Merely becausethere were certain notes carrying the name of the assessee, per se,without any enquiry or material, we do not think the AssessingOfficer could justifiably assume jurisdiction under Section 16 of theTamil Nadu General Sales Tax Act, 1959. 9. It may be pointed out that the Assessing Officer did not sayin his reassessment order about the materials not considered whilemaking the original assessment. Thus, the source of getting thematerials relied on by the Assessing Officer for reassessmentremaining unanswered and unexplained, we do not find any ground toupheld the order of the Tribunal. Although, the Sales Tax AppellateTribunal is a final fact finding authority, yet in the present case,without any material, it confirmed the reassessment order and thereasoning does not rest on any material. Thus, the basis of there-assessment itself being very shaky, in the absence of materialsdisclosed as to whether the reassessment was based on account ofinspection or based on third party's information and opportunity notbeing granted to the assessee, we do not find any ground forsustaining the order of assessment. Accordingly, the Tax CaseRevision stands allowed. The order of the Sales Tax AppellateTribunal is set aside. No costs.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarnvsriTo1.The Commercial Tax Officer Vridhachalam2. The Appellate Assistant Commissioner Cuddalore -1.3. The Tamil Nadu Sales Tax Appellate Tribunal(AdditiOnal Bench), Madras4.The Assistant Registrar Income Tax Appellate Tribunal IIIrd Floor, Rajaji Bhavan, Besant Nagar, chennai - 901 CC to the Special Government Pleader SR NO 596491 cc To Mr.S.Sivanandam, Advocate, SR.59336Tax Case Revision No.1731 of 2008TRM (CO)SRA(5/12/2012)