TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>High Court rules in favor of assessee challenging best judgment assessment for 2002-03, emphasizing need for valid reasons</h1> <h3>Classic Marbles Versus State of Kerala</h3> Classic Marbles Versus State of Kerala - [2009] 25 VST 295 (Ker) Issues involved:Assessment based on best judgment, Rejection of returns, Addition of gross profit, Burden of proof on assessee, Justification of addition without discrepancies.Assessment based on best judgment:The revision petition challenged the orders of the Sales Tax Appellate Tribunal for the assessment year 2002-03. The assessee, a dealer in marbles, maintained regular books of account as required by law. The assessing authority rejected the returns filed by the assessee and issued a pre-assessment notice proposing a best judgment assessment due to low conceded gross profit. The assessee objected, explaining the reasons for the declared profit and requesting a regular assessment instead of best judgment. The assessing authority rejected the objections, adding 10% gross profit to the declared amount. The High Court emphasized that for best judgment assessment, valid reasons must be provided for rejecting returns and making additions to turnover and profit. In this case, the assessing authority's reasoning was deemed arbitrary and capricious, leading to the court's decision in favor of the assessee.Rejection of returns and addition of gross profit:The assessing authority rejected the assessee's explanation and confirmed the proposal to increase the gross profit by 10%. The court noted that the authority failed to provide valid reasons for rejecting the statutory audit report or the maintained books of account. Additionally, there was no evidence to suggest that the declared profit was inaccurate or that the business nature warranted a higher profit margin. The court found the assessing authority's reasoning arbitrary and unsupported, leading to the decision in favor of the assessee.Burden of proof on assessee:The assessee raised concerns regarding the burden of proof, questioning the Tribunal's justification for placing the burden on them to prove a negative fact regarding profit margin. The court ruled in favor of the assessee, emphasizing that the burden lies on the revenue to substantiate any claims of higher profit rates, especially when no discrepancies or penalties were found in the accounts.Justification of addition without discrepancies:The Tribunal's decision to add profit without any evidence of inspection, stock variation, penalties, or discrepancies was challenged by the assessee. The court found the addition unjustified, especially considering the positive trend in profit and trade volume compared to the previous year. The court ruled in favor of the assessee, directing the assessing authority to accept the conceded gross profit and issue a fresh assessment order promptly.In conclusion, the High Court's judgment favored the assessee, highlighting the importance of providing valid reasons for best judgment assessments, rejecting arbitrary additions to declared turnover and profit, and emphasizing the burden of proof on the revenue authorities.
TaxTMI 
TaxTMI 
