Court No. - 1
Case :- SALES/TRADE TAX REVISION No. - 234 of 2019 Revisionist :- M/S Yusuf Readymade Garments Opposite Party :- The Commissioner Commercial Taxes Counsel for Revisionist :- Sanyukta Singh,Shubham Agrawal Counsel for Opposite Party :- C.S.C.
and Case :- SALES/TRADE TAX REVISION No. - 237 of 2019 Revisionist :- M/S Yusuf Readymade Garments Opposite Party :- The Commissioner, Commercial Taxes Counsel for Revisionist :- Sanyukta Singh,Shubham Agrawal Counsel for Opposite Party :- C.S.C.
Hon'ble Saumitra Dayal Singh,J.
1. Heard Ms. Sanyukta Singh, learned counsel for the assessee and Sri B.K. Pandey, learned Standing Counsel for the revenue.
2. The present set of revisions have been filed by the assessee against the common order of the Commercial Tax Tribunal, Moradabad dated 23.02.2019 passed in Second Appeal Nos. 617 of 2018 for A.Y. 2012-13 and 618 of 2018 for A.Y. 2013-14. By that order, the Tribunal has confirmed the order passed by the assessing authority and the first appeal authority and thereby affirmed the best judgment assessment made against the assessee whereby additions have been sustained with respect to the business conducted in the name of M/S Al- Fateh Tailors & Traders.
3. Both revisions were admitted on the following question of law:
"Whether the book/diary during the survey admittedly belonging to the third party could be made basis for making an assessment upon the applicant, when the applicant was not in existence in the assessment in dispute?"
4. Learned counsel for the assessee submits that the assessee-Mohd. Yusuf is the son of Abdul Hameed. The assessee started his sole propriety business in the name of M/S Yusuf Readymade Garments from September, 2015 when the assessee was first granted registration.
5. The assessee was engaged in the activity of tailoring and stitching wearable clothes from material provided by individual customers. On 23.09.2015, a survey was conducted at the business premises of the assessee wherein a book belonging to M/S Al-Fateh Tailors & Traders was discovered and seized by the Special Investigation Branch (SIB) of the revenue department. That book contained the details of tailoring done by the father of the assessee i.e. by Abdul Hameed during the assessment years 2012-13 & 2013-14.
6. While the revenue authorities have relied on that seized material and consequently rejected the books of accounts of the assessee and made additions to the turnover of the assessee it has been the assessee's explanation that his father Abdul Hameed discontinued his business in the name of M/S Al-Fateh Tailors & Traders on account of old age. Also, the assessee had filed an affidavit stating that he was not the proprietor of the business M/S Al-Fateh Tailors & Traders and that he had no concern with he same. The said business belonged to the assessee's father and the assessee only used to help out his father. On account of the assessee's father having discontinued his business, the seized book came into hands of the assessee for reference of other purpose.
7. In such facts, it has been submitted that the assessing officer did not record any finding that the assessee was the proprietor of the discontinued business Al-Fateh Tailors & Traders and there is no other finding to hold that it was the assessee who had conducted that business.
8. As to the findings recorded by the Tribunal, it has been submitted that again those findings are not to the effect that the assessee was the sole proprietor of the business M/S Al-Fateh Tailors & Traders. Even if the findings of the Tribunal were to be accepted, the Tribunal has only found that the assessee alongwith his father had conducted that business, while the assessee is the sole proprietor of the business M/S Yusuf Readymade Garments which has been subjected to assessment. Therefore, in any case, the discontinued business was that of a partnership or such as may have been conducted by an association of persons and this liability could not be fastened by way of assessment order against the assessee i.e. the sole proprietor of the business.
9. While learned Standing Counsel has submitted that in fact, it was the assessee who was conducting those businesses, it being the tax assessment, the status of the assessee could have been made clear by the assessing officer in the assessment order itself. The fact that revenue authorities themselves admitted that the business of M/S Al-Fateh Tailors & Traders was being conducted by two persons i.e. Abdul Hamid and the present assessee whereas it is their own case that the assessee alone had been subjected to assessment as the sole proprietor of the business M/S Yusuf Readymade Garments, it is clear that the two liabilities that arose in law had to be assessed separately on two different assessees. The liability of the partnership or the association of persons (as may be the case) could not be fastened on the sole proprietor concern of the present assessee, specially in absence of any notice or reasoning given by the assessing officer as to how he has proceeded to assess the liability of the discontinued business conducted by two persons on the sole propriety concern, of the present assessee. There is clear lack of application of mind and there is clear absence of any necessary finding recorded as to the status of the assessee or the manner in which such liability as has been fixed on the present assessee. Mere existence of blood relationship between persons involved in the two businesses is of no consequence.
10. In view of the above, the question of law is answered thus : though the books of account of the third person may have been relevant for the purpose of assessment of the assessee, however, in absence of any material being found therein representing concealed transaction of the present assessee, neither any rejection of books of account nor any addition may have been made in the case of assessment, for the sale proprietorship concern of the assessee.
11. Accordingly, the present revisions are allowed.
Order Date :- 30.7.2019 Abhilash