1981 (8) TMI 245 - HC - VAT and Sales Tax

Tribunal Error Leads to Rejection of Assessee's Account Book for 1974-75

The High Court of Allahabad rejected the account book of the assessee for the assessment year 1974-75 but upheld the turnover determined by the Tribunal ... Rejection of account book - failure to maintain manufacturing account - turnover determined to best judgment - acceptance of disclosed turnover despite account rejection - technical defect - action under Section 11(8)Rejection of account book - failure to maintain manufacturing account - Whether the Tribunal erred in accepting the assessee's accounts despite the assessee, a manufacturer, not maintaining a manufacturing account. - HELD THAT: - The Tribunal found that although the assessee did not maintain a manufacturing account or stock register, other books disclosed turnover reasonably and sales and purchases were verifiable, and therefore refused to reject the account book. Having regard to the Division Bench decision in Luxco Electronic (recorded by this Court), failure to maintain a manufacturing account by a manufacturer warrants rejection of the account book. The Tribunal's acceptance of accounts despite recording that the assessee did not maintain any manufacturing account was therefore incorrect. [Paras 2, 4]Tribunal's acceptance of accounts set aside; the account book of the assessee shall stand rejected.Turnover determined to best judgment - acceptance of disclosed turnover despite account rejection - technical defect - Whether the disclosed turnover determined by the Tribunal should nevertheless be accepted though the account book is rejected. - HELD THAT: - Although the account book is rejected for failure to maintain a manufacturing account, the defect was treated as technical. Following the principle applied by this Court in Commissioner of Sales Tax v. Pilot Shoe Co., the disclosed turnover as determined by the Tribunal is reasonable and may be accepted despite rejection of the account book. Consequently, the Tribunal's computation of turnover is maintained even while the accounts are rejected. [Paras 3, 4]Disclosed turnover as determined by the Tribunal is upheld and shall be maintained.Final Conclusion: Revision allowed; Tribunal's order set aside to the extent of its acceptance of the account book - the account book is rejected but the turnover determined by the Tribunal is maintained; copy of this order to be sent to the Tribunal for action under Section 11(8) of the Act; no order as to costs. The High Court of Allahabad rejected the account book of the assessee for the assessment year 1974-75, but upheld the turnover determined by the Tribunal. The Tribunal erred in accepting the accounts despite the assessee not maintaining a manufacturing account. The disclosed turnover of the assessee was deemed acceptable due to a technical defect. The revision was allowed, the tribunal's order was set aside, and the account book was rejected.