Accepted books of account limit revisional interference; purchase tax and turnover additions were also rejected on proven facts and exemption.

Accepted books of account could not be reopened by the revisional authority on a speculative reappraisal of nexus between purchases and turnover, especially where the accounts were not rejected and the genuineness of the records was not disputed; the Tribunal's relief to the assessee was upheld on this point. Purchase tax was also not leviable on charcoal, firewood and brickets purchased from unregistered dealers and used mainly for heating water in the lodging section, because the Revenue failed to dislodge the factual finding on end use. The deletion of the turnover addition relating to food, drinks and liquor was sustained in view of the applicable liquor and beer exemption from 16 February 2001. The revision petition failed on all substantive issues.

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Issues: (i) whether the revisional authority could interfere with the assessment when the assessee's books of account had been accepted, including on the alleged nexus between purchases and business turnover; (ii) whether purchase tax under section 6 was leviable on charcoal, firewood and brickets purchased from unregistered dealers and used in the hotel business; and (iii) whether the deletion of the turnover addition relating to food, drinks and liquor was justified.

Issue (i): whether the revisional authority could interfere with the assessment when the assessee's books of account had been accepted, including on the alleged nexus between purchases and business turnover.

Analysis: The revisional authority had accepted the turnover disclosed and the audit of the books, and did not dispute the genuineness of the accounts. Once the books of account were not rejected, it was not open to the revisional authority to reopen the assessment or to rework the turnover on the footing that there was no nexus between purchases of provisions and the business turnover. The finding that food was supplied at concessional rates to employees and that turnover could not be mechanically linked to such purchases was upheld.

Conclusion: The contention against interference on the basis of accepted books of account was rejected, and the Tribunal's view was upheld in favour of the assessee on this issue.

Issue (ii): whether purchase tax under section 6 was leviable on charcoal, firewood and brickets purchased from unregistered dealers and used in the hotel business.

Analysis: The Tribunal had found that the main use of charcoal and brickets was for heating water in the lodging section and that they were not used for preparing food articles in the restaurant section. The Revenue did not establish a contrary factual basis sufficient to disturb that finding. On those facts, the revision of assessment on the purchase of charcoal and allied items was not justified.

Conclusion: Purchase tax was not held leviable on the impugned purchases, and the assessee succeeded on this issue.

Issue (iii): whether the deletion of the turnover addition relating to food, drinks and liquor was justified.

Analysis: The Court accepted the position that exemption from levy on sale of liquor and beer operated from 16 February 2001 onwards. In view of that exemption and the absence of merit in the Revenue's challenge, the deletion of the addition was sustained.

Conclusion: The deletion of the turnover addition was upheld, and this issue was decided against the Revenue.

Final Conclusion: The revision petition failed on all the substantive questions, and the Tribunal's relief to the assessee was maintained.

Ratio Decidendi: Where the revisional authority accepts the genuineness of the assessee's books of account, it cannot reopen or modify the assessment on a speculative reappraisal of nexus or turnover, and tax liability must be tested on the proven factual use of the purchases and the applicable exemption regime.

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