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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the amount reflected in the proforma invoice could be treated as suppressed taxable turnover for the relevant year and whether the consequential tax and penalty could be sustained.
Analysis: The assessment rested on a survey slip referring to a proforma invoice, but no final invoice for that year or other independent evidence established an actual taxable sale during the relevant assessment period. The assessee's explanation that the third machine was sold in the next year under a final invoice was supported by account details furnished to the Income-tax k authority and by the transactional sequence with the same purchaser. A proforma invoice by itself does not create a taxable sale, and the burden lay on the Revenue to prove that a completed sale and corresponding suppressed turnover existed in the assessment year.
Conclusion: The alleged amount could not be treated as suppressed taxable turnover, and the tax and penalty were unsustainable.
Final Conclusion: The writ petition succeeded, the impugned orders were set aside, and refund of amounts collected on this account was directed with interest.
Ratio Decidendi: A proforma invoice, without proof of an actual sale in the relevant year, cannot by itself justify a finding of suppressed taxable turnover; the Revenue must establish the taxable sale with evidence.
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