1957 (11) TMI 11 - HC - VAT and Sales Tax

Tribunal can independently assess tax liability despite Criminal Court's acquittal

Macherlappa & Sons Versus Government of Andhra (Now Andhra Pradesh)

The High Court upheld the Tribunal's findings, ruling that the Tribunal was not bound by the Criminal Court's acquittal and could independently assess tax ... - Issues involved:1. Whether the petitioner placed before the Tribunal the judgment of the Criminal Court and argued on the basis of it.2. Whether the finding of the District Magistrate in C.C. No. 73 of 1955 is binding on the Tribunal, and if so, what is the effect of that finding on the assessment.Detailed Analysis:Issue 1: Whether the petitioner placed before the Tribunal the judgment of the Criminal Court and argued on the basis of it.The Tribunal found that the appellant did not file a certified copy of the judgment of the Criminal Court before them. Instead, a private copy of the judgment was sent by post on 22nd August 1955 and received on 24th August 1955. The appellant requested interim stay until the disposal of the appeals in the accompanying memo. However, the appellant neither served a copy of this judgment to the State Representative nor filed a petition to admit the judgment in evidence at the time of the appeal hearing. Consequently, it was determined that the judgment was not formally brought to the Tribunal's notice, and arguments regarding its effect on the assessment proceedings were not addressed.Issue 2: Whether the finding of the District Magistrate in C.C. No. 73 of 1955 is binding on the Tribunal, and if so, what is the effect of that finding on the assessment.The Deputy Commercial Tax Officer found various documents during a surprise inspection of the appellant's business premises and assessed the appellant on a best judgment basis for the years 1952-53 and 1953-54. The appellant contended that the writings found were those of an insane son and not reliable. Both the Commercial Tax Officer and the Tribunal rejected this contention and confirmed the assessment.The appellant argued that the District Magistrate in C.C. No. 73 of 1955 found that the books did not belong to the assessee, and this finding should be binding on the Tribunal. However, the Tribunal noted that the Criminal Court did not unequivocally find that the books did not belong to the accused but merely stated that the prosecution failed to prove the connection beyond reasonable doubt. This does not preclude the Tribunal from reaching a different conclusion based on the material before it.The Tribunal's findings were as follows:(a) The Criminal Court did not unequivocally hold that the account books did not belong to the accused.(b) The acquittal in the Criminal Court, based on the 'benefit of doubt,' does not bar the Tribunal from independently assessing the connection of the accused with the books.(c) The acquittal does not prevent the Tribunal from levying proper tax based on appropriate evidence.Judgment Analysis:Upon receiving the Tribunal's findings, the High Court considered whether the Tribunal should have accepted the Criminal Court's judgment. The Court noted that the Tribunal could have asked the State Representative about the judgment, potentially obviating the need for a certified copy. The Court then addressed the legal question of whether the findings of a Criminal Court are binding on administrative and quasi-judicial tribunals.The Court concluded that the judgment of a Criminal Court is not admissible in evidence under sections 40 to 43 of the Evidence Act and is not binding on civil or quasi-judicial tribunals. The Court emphasized that the standard of proof in criminal cases is higher than in civil or fiscal matters, and the principles governing criminal justice cannot be extended to taxation realms. The Court also rejected the argument that the department, having elected to prosecute, could not ignore the criminal judgment. The Court held that both criminal prosecution and tax assessment can proceed concurrently and independently.The Court found no grounds to interfere with the Tribunal's assessment, noting that the turnover estimates were based on materials that justified the levy. The revision petitions were dismissed with costs.Conclusion:The High Court upheld the Tribunal's findings, determining that the Tribunal was not bound by the Criminal Court's acquittal and could independently assess the tax liability based on the evidence before it. The revision petitions were dismissed, affirming the assessments for the years 1952-53 and 1953-54.