Eligibility Certificate controls tax exemption; subordinate authorities cannot reduce it, while factual rejection of books was upheld.

Where a competent statutory authority issues an Eligibility Certificate granting tax exemption, the assessing authority and first appellate authority must give it full effect and cannot ignore, reduce, or alter the exemption unless the statute expressly authorises them to do so. A later clarification or modification by the Divisional Level Committee was treated as without jurisdiction and a nullity, because the power to modify or cancel the certificate vested only in the Commissioner. The separate finding rejecting the books of account and making a best judgment assessment was based on factual material and was not interfered with in revision absent legal error or perversity. The revisions were therefore allowed only to the extent relating to exemption.

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Issues: (i) Whether the assessing authority and the first appellate authority could ignore or alter the exemption granted by the Eligibility Certificate issued to the assessee under section 4-A of the U.P. Trade Tax Act, 1948, and whether the later clarification/modification by the Divisional Level Committee was valid. (ii) Whether the rejection of books of account and best judgment assessment called for interference.

Issue (i): Whether the assessing authority and the first appellate authority could ignore or alter the exemption granted by the Eligibility Certificate issued to the assessee under section 4-A of the U.P. Trade Tax Act, 1948, and whether the later clarification/modification by the Divisional Level Committee was valid.

Analysis: Under the statutory scheme, exemption for a new unit arose only after application to the competent committee and issuance of an Eligibility Certificate. Once such certificate was granted, the assessing authority was bound to give it full effect and had no jurisdiction to re-adjudicate entitlement to exemption or alter its extent. The limited power to modify or cancel the certificate vested in the Commissioner under the relevant provision, and there was no jurisdiction in the Divisional Level Committee to revisit the granted certificate on the assessee's later application. An order passed without inherent jurisdiction was treated as a nullity, and acquiescence or failure to challenge it could not confer jurisdiction. The reliance placed on a different exemption scheme was held inapplicable because that case concerned a notification-based concession, not a certificate-based entitlement already granted by the competent authority.

Conclusion: The issue was answered in favour of the assessee and against the revenue.

Issue (ii): Whether the rejection of books of account and best judgment assessment called for interference.

Analysis: The finding rejecting the books of account was based on factual material and evidence considered by the authorities below. In revisional jurisdiction, such a factual determination did not warrant interference absent legal error or perversity.

Conclusion: The issue was answered in favour of the revenue and against the assessee.

Final Conclusion: The exemption entitlement could not be curtailed by the assessing and appellate authorities contrary to the Eligibility Certificate, but the factual finding on rejection of books of account was left undisturbed; the revisions were only allowed to the extent relating to exemption.

Ratio Decidendi: Where a competent statutory authority issues an Eligibility Certificate granting tax exemption, subordinate assessing or appellate authorities cannot ignore, modify, or reduce that entitlement unless the statute expressly confers such power on them.

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