Court No. - 1
Case :- SALES/TRADE TAX REVISION No. - 852 of 2008 Revisionist :- Kashyap Organics P Limited Thru Director Anil Sharma Opposite Party :- The Commissioner Commercial Taxes U.P. Lucknow Counsel for Revisionist :- Nikhil Agrawal Counsel for Opposite Party :- C.S.C. and Case :- SALES/TRADE TAX REVISION No. - 851 of 2008 Revisionist :- Kashyap Organics P Limited Thru Director Anil Sharma Opposite Party :- The Commissioner Commercial Taxes U.P. Lucknow Counsel for Revisionist :- Nikhil Agrawal Counsel for Opposite Party :- C.S.C.
Hon'ble Saumitra Dayal Singh,J.
1. The present revision-Sales/Trade Tax Revision No.852 of 2008 has been filed against the order of the Trade Tax Tribunal, Ghaziabad dated 28.03.2008 in Second Appeal No.738 of 2007 for A.Y. 2004-05 (UP). Also, Trade Tax Revision No.851 of 2008 has been filed inter parties arising from that common order of that Tribunal passed in Second Appeal No.739 of 2007 for A.Y. 2004-05 (Central). The Tribunal has granted partial relief to the assessee. Though, the Tribunal has upheld the rejection of the books of accounts of the assessee, it has restricted enhancement to the undisclosed turnover at Rs.25,00,000/- for UP assessment and Rs.35,00,000/- for Central assessment.
2. Heard Sri Nikhil Agarwal, learned counsel for the applicant-assessee and Sri B.K. Pandey, learned Standing Counsel for the revenue.
3. Learned counsel for the assessee would submit, the assessee is engaged in the manufacture of acetic acid, acetic anhydride and vinyl acetate. These goods are manufactured from the raw material de- natured spirit, specially de-natured spirit and rectified spirit. The ratio of the raw material utilized and the finished product is of about 740Kg : 1000 Kg. Further, the raw materials noted above are subject to payment of central excise duty and also, their transportation and handling are regulated under the State laws. It is clear that no discrepancy whatsoever was alleged or found with respect to maintenance of accounts, registers etc. both under the Central Excise Act as also the UP Excise Act. Therefore, the alleged discrepancy noted during the survey dated 21.12.2004 and 23.12.2004 conducted at the manufacturing and business premises of the assessee respectively was insignificant, especially in view of the fact that there was no physical verification of the stock carried out during those survey. It is his submission that the books seized during the two survey, did not establish that the assessee had engaged in any manufacturing activity outside its books of account or that the assessee had purchased any raw material or sold any finished goods outside its book of account. Merely, because some of the invoices discovered during the survey were not serially numbered, the Assessing Officer completed the assessment hurriedly, concluding that those were undisclosed transactions. In such facts, the following questions of law have been pressed:- "(i) Whether the assessing authority having recorded a finding on internal page 6 of its order that no physical verification of stock having been made by the SIB at the time of survey, no adverse inference can be drawn on the basis of exhibits, the learned Commercial Tax Tribunal, Noida as well as Joint Commission of Appeals were legally justified in rejecting the books of accounts of the applicant and enhancing the purchase of raw material on the basis of estimation based on surmises and conjectures even though the entire activity of purchase of raw material, production and sales are under strict control of U.P. Excise Authorities and necessary records are also maintained by them under the provisions of U.P. Excise Act?
(ii) Whether in the learned Commercial Tax Tribunal, Bench Noida was legally justified in estimating the turnover of suppressed purchases at Rs.55 lakhs and that of suppressed sales of Rs.25 lakhs merely on the basis of surmises and conjectures?"
4. On the other hand, learned Standing Counsel would submit that bare perusal of Exhibit Nos.4, 5 and 6 seized during the survey, would reveal that those were complete used invoice, books and not few lose invoices. The assessee was thus found to have made sale inside UP of value Rs.8,50,457/- and under the Central law of value Rs.16,51,687/- outside its books. He would submit, once the sale invoices were not numbered and the same were found used in invoice books an inescapable conclusion arose that the assessee had maintained parallel books of account. Therefore, the rejection of books of account cannot be faulted. As to estimation of the turnover, learned Standing Counsel would submit that against the addition of Rs.1.5 crores each made under the UP and the Central Acts by the Assessing Officer and of Rs.2 crores to the undisclosed purchase of raw materials, the appellate authorities had granted the substantial relief. The first appellate authority reduced the undisclosed turnover of Rs.75,00,000/- under the UP Act and Rs.70,00,000/- under the Central Act. Correspondingly, the purchase of raw material was also reduced to Rs.1 crore. In further appeal, the Tribunal granted further relief and estimated turnover under the UP Act at Rs.25,00,000/- while it has estimated the turnover at Rs.35,00,000/- under the Central Act. Correspondingly, it has estimated the undisclosed purchase of raw material at Rs.55,00,000/-.
5. Having heard learned counsel for the parties and having perused the record, in the first place, in absence of any credible explanation being submitted with respect to the three non-serialled used invoice, books seized from the assessee which record transactions of about Rs.25,00,000/-, it has to be accepted that the Tribunal had not made any error in affirming the finding of rejection of the books of account as clearly the assessee was found maintaining parallel books. Insofar as the estimation of turnover is concerned, by way of first principle, it remains undisputed that certain amount of guess work is necessarily involved in such cases. This guess work was based on the undisclosed sales of Rs.25,00,000/- discovered during the survey. In view of that clear evidence of undisclosed turnover of about Rs.25,00,000/-, the Tribunal has made an addition of only Rs.60,00,000/- which is a little more than two times of the material available with the revenue authorities. Therefore, that estimation is neither excessive nor arbitrary. Rather, it appears to be based on the material discovered during the survey.
6. As to the purchase of raw material, while learned counsel for the assessee would submit that the assessing officer had recorded categorical finding that no physical verification of stock was made at the time of survey and therefore, no adverse inference may be drawn thereon, it appears that that finding can never be read in isolation in face of Exhibit Nos.4, 5 and 6, as discussed above. Once the assessee was found to have manufactured and sold goods outside its books, the estimation of undisclosed purchase of raw material was a natural consequence of that finding. The fact that the central excise and state excise authorities may not have found or considered that material to be adverse, may only be relevant for proceedings under those Acts and not for the present proceeding where the assessee has been found to have dealt with goods outside its books.
7. Insofar as there exists a proportion between the raw material consumed and the manufactured goods, the submission advanced by learned counsel for the assessee that the proportion between the raw material and the manufactured goods would remain the same, whether they are disclosed in the books or not, it is not for this Court to consider that issue any further, under the revisional jurisdiction to make minor corrections or to seek or pursue empirical truth in such matters. Insofar as the estimation made is based on relevant material and consideration, no interference is warranted with that finding of fact.
8. The present revision lacks merit and is accordingly dismissed.
Order Date :- 30.7.2019 Abhilash