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of <h1>Court affirms Assessing Officer's decision on turnover addition under KVAT Act, stresses documentation importance.</h1> <h3>C.K. Rajan Versus State of Kerala And (Vice-Versa)</h3> C.K. Rajan Versus State of Kerala And (Vice-Versa) - TMI Issues:1. Assessment based on turnover suppression detected by Intelligence Officer.2. Liability under Section 6(2) based on estimation by Assessing Officer.3. Validity of estimation made towards probable omissions and suppression.4. Allowance of special rebate under Section 12.5. Ownership of stock found in assessee's premises.6. Application of Velimparambil Hardwares case.7. Maintenance of proper books of accounts by the assessee.8. Eligibility for special rebate post-registration.Analysis:1. The assessment in question arose from an inspection revealing a significant turnover suppression of Rs. 3,33,69,622 by the assessee engaged in manufacturing gold ornaments on a job work basis. The Assessing Officer added 90% of the suppressed turnover under Section 6(2) of the KVAT Act. The first appeal deleted this addition, but the Tribunal reinstated it along with an equal amount for probable omissions. The State appealed against the deletion, while the assessee contested the turnover adoption, claiming no direct purchase or sale of gold.2. The court found the assessee's claim of only conducting job works unsubstantiated, noting purchases exceeding Rs. 19 lakhs, necessitating compulsory registration under Section 15 of the KVAT Act. The invoices from a registered jeweler were deemed insufficient to prove ownership of the detected stock. The court referenced Velimparambil Hardwares to emphasize the need for proper documentation supporting goods transfer for job works.3. Regarding the estimation of purchase turnover, the court upheld the Assessing Officer's decision, given the lack of proper accounts maintenance by the assessee and the probability of additional suppressed transactions. The court deemed the estimation justified, considering the unavailability of evidence for actual purchases and tax payments.4. The court addressed the issue of special rebate eligibility post-registration, highlighting Section 12's prohibition of rebates for unregistered dealers. Despite the subsequent registration by the assessee, the court held that the detection and estimation occurred before registration, rendering the special rebate inapplicable.5. Ultimately, the court ruled against the assessee on questions related to turnover suppression adoption and purchase turnover estimation, aligning with statutory provisions. However, considering the job work nature and rebate ineligibility, the court modified the additional liability to 25% of the initial amount. The court also confirmed the denial of special rebate, emphasizing the timing of detection and registration as crucial factors.
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