2014 (5) TMI 571 - HC - VAT and Sales Tax

High Court overturns Tribunal decision for 1991-92 assessment due to errors in evidence acceptance and procedural irregularities.

The High Court set aside the Tamil Nadu Sales Tax Appellate Tribunal's decision for the assessment year 1991-92. The Tribunal erred in accepting the ... Reduction in Taxable turnover - Suppressions of documents – Documents produced at the stage of second appeal - Held that:- A reading of the order of the Tribunal shows that it accepted the documents from the assessee without verifying the original records and granted the relief – AAC went through the objections of the assessee along with the materials produced - Thus, with the materials produced for the first time, AAC rightly remanded the assessment back to the AO for the purpose of checking the details with reference to D7 records and with the regular books of accounts - When that being the case, No justification found in the order of the Tribunal to allow the case of the assessee as a matter of course and without even checking the same with reference to the material records and accounts regularly maintained by the assessee – Therefore, the proper course herein would be to reaffirm the view of the AAC to allow the Assessing Officer to look at the details produced by the assessee with reference to D7 records as regards despatch of cashew kernal made to the Head Office at Quilon. The documents produced before the Tribunal were only photocopies - Tribunal should have tested the claim of the assessee with reference to the originals and with reference to the accounts - Without verifying the originals and with the entries in the account, Tribunal committed a serious legal flaw in allowing the appeal by accepting the case of the assessee as a matter of course, thereby, granting the relief - As a final fact finding body, the Tribunal should have either called for a report on the materials produced and the account checked or at least remanded the matter for fresh consideration, as had been done by AAC - In the absence of any of these courses adopted, with perversity writ large, the order of the Tribunal, calls for interference by this court – Order of Tribunal set aside restoring the matter to the files of AO to do the assessment in accordance with law after giving opportunity of hearing to the assessee - Revision is allowed – Decided in favour of Revenue. Issues:1. Validity of assessment order passed by the Tamil Nadu Sales Tax Appellate Tribunal for assessment year 1991-92.2. Acceptance of explanation and documentary evidence by the Tribunal contrary to statutory provisions.3. Setting aside estimation suppressions based on documents produced at the second appeal stage.4. Reduction in penalty levied under Section 12(3) by the Tribunal.Issue 1: The assessment order for the assessment year 1991-92 was challenged by the Revenue before the High Court, questioning the correctness of the Tribunal's decision. The Tribunal had accepted the plea of the assessee and deleted a substantial turnover amount based on newly produced evidence. The High Court observed that the Tribunal had erred in accepting the case of the assessee without proper verification of original records and accounts. The High Court set aside the Tribunal's order and directed the Assessing Officer to reevaluate the assessment in accordance with the law after providing an opportunity of hearing to the assessee.Issue 2: The Tribunal accepted the explanation and documentary evidence provided by the assessee for the first time during the second appeal, contrary to statutory provisions. The High Court noted that the Tribunal had not verified the original records and had granted relief based on photocopies of documents. The High Court held that the Tribunal's decision was flawed as it did not follow proper procedures and did not cross-check the evidence with regular books of accounts. Consequently, the High Court set aside the Tribunal's order and instructed the Assessing Officer to reevaluate the assessment based on the details furnished by the assessee.Issue 3: The Tribunal had set aside estimation suppressions based on documents produced during the second appeal without independent assessment of the materials on record. The High Court found that the Tribunal had not conducted a thorough verification of the evidence presented by the assessee and had granted relief without proper scrutiny. The High Court concluded that the Tribunal's decision lacked legal justification and interfered with the assessment process. Therefore, the High Court set aside the Tribunal's order and directed the Assessing Officer to reassess the matter in accordance with the law.Issue 4: The Tribunal had reduced the penalty levied under Section 12(3) to 50%, which was challenged for its legal sustainability. The High Court reviewed the Tribunal's decision and found that the reduction in penalty was based on the relief granted in the assessment order. The High Court upheld the Tribunal's decision regarding the penalty reduction but set aside the overall assessment order due to procedural irregularities. Consequently, the High Court allowed the Tax Case Revision, setting aside the Tribunal's order and remanding the matter to the Assessing Officer for proper assessment in compliance with the law.