Proper tax enquiry required before adverse assessment; assessments set aside where documents were not considered and matters remanded.

Tax assessment under the Tamil Nadu Value Added Tax Act could not be sustained where the assessee had produced objections, books of account, registers, invoices, bank payment details and other supporting records, but the assessing authority failed to examine that material or explain why it was insufficient. The HC held that adverse conclusions in tax matters require a proper enquiry and due consideration of the documents relied on by the assessee. As the assessments were made in a cursory manner without discussing the evidence, they were set aside and the matters remanded for fresh consideration with a personal hearing and an opportunity to produce relevant records.

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Issues: Whether the assessment orders under the Tamil Nadu Value Added Tax Act, 2006 could be sustained when the assessee claimed that relevant records and documents had been produced but the assessing authority passed the orders without a proper enquiry and without discussing the documents relied on by the assessee.

Analysis: The assessee produced objections, books of account, registers, invoices, bank payment details and supporting records to establish the genuineness of the transactions. The assessing authority, while disputing the claim of input tax credit and related turnovers, did not deal with the nature of the documents produced or explain why they were insufficient. In a matter involving taxation, the authority was required to conduct a thorough enquiry and consider the material placed before it before drawing adverse conclusions. The absence of such consideration showed that the assessment was made in a cursory manner.

Conclusion: The impugned assessments were unsustainable and were set aside. The matters were remanded to the respondent for fresh consideration after granting personal hearing and permitting the assessee to produce relevant documents and books of account.

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