2007 (8) TMI 663 - HC - VAT and Sales Tax

Need Concrete Evidence for Tax Revision: Speculation on Electricity Use Not Enough

Commissioner of Trade Tax, UP., Lucknow Versus Hans Casting Pvt. Ltd.

The Tribunal dismissed the revision, emphasizing the requirement for concrete evidence of turnover escapement to justify reassessment under the U.P. Trade ... - Issues:Dispute related to assessment year 1989-90 - Legality of Trade Tax Tribunal accepting dealer's taxation declaration despite suppressed sale detected by Trade Tax Officer, SIB.Analysis:The case involved a dispute regarding the assessment year 1989-90, focusing on whether the Trade Tax Tribunal was justified in accepting the dealer's taxation declaration despite the Trade Tax Officer, SIB, detecting suppressed sales during scrutiny of records from the Central Excise and Custom Department of Kanpur. The dealer, a manufacturer of M. S. ingot, initially had an assessment order passed in 1994 accepting the account books and determining a taxable turnover with a tax liability. Subsequently, the assessing officer, SIB, identified discrepancies in turnover leading to a reassessment with a higher turnover and tax liability. The dealer appealed this reassessment, and the Deputy Commissioner (Appeal) remanded the matter for a fresh assessment. The dealer then appealed to the Tribunal.The Tribunal, referencing past court decisions, emphasized that high electricity consumption alone cannot justify reopening of assessment. It was highlighted that the assessing officer must present concrete evidence of turnover escapement to warrant proceedings under section 21 of the U.P. Trade Tax Act. Mere speculation based on electricity consumption levels is insufficient to support reopening of assessment. The Tribunal concurred with previous court rulings on this matter, reinforcing the necessity of substantial evidence to allege turnover escapement and validate reassessment under the Act.In the final judgment, the court found the revision lacking merit and subsequently dismissed it. The decision was made without any order regarding costs. The ruling upheld the principle that reopening assessments based solely on high electricity consumption without concrete evidence of turnover escapement is not legally justified under the U.P. Trade Tax Act.