1977 (3) TMI 79 - AT - Income Tax

Appellate tribunal overturns Gross Turnover enhancement, emphasizes record-keeping

VOLLA PARAYYA & BROS. Versus STATE OF ORISSA.

VOLLA PARAYYA & BROS. Versus STATE OF ORISSA. - TTJ 004, 1522, Issues:1. Rejection of appellant's accounts by assessing officer and enhancement of gross turnover.2. Dismissal of appeal by first appellate Court based on rejection of accounts.3. Arguments regarding the maintenance of accounts and purchase vouchers.4. Contention by the Addl. State Representative on the verifiability of purchases.5. Consideration of whether appellant's accounts should be rejected.Analysis:The appellant, a registered dealer in seasonal goods, filed a return for the assessment year 1973-74 with a Gross Turnover (G.T.O.) of Rs. 87,462.57. The assessing officer, after scrutiny, increased the G.T.O. by Rs. 10,000 and added Rs. 8,000 to the taxable turnover due to discrepancies in the accounts. The first appellate Court upheld the rejection of accounts, noting the lack of verifiable purchase vouchers and suspicious past records. The appellant argued that despite not having purchase vouchers from Adivasis, their accounts were meticulously maintained with commodity-wise stock registers, refuting any suppression of purchases. The Addl. State Representative contended that the absence of vouched purchases justified the rejection of accounts.The critical issue revolved around whether the appellant's accounts should be rejected based on the lack of purchase vouchers. The appellate tribunal highlighted that the appellant, a partnership firm, maintained detailed sales and stock registers, which were verifiable. Despite the absence of individual purchase vouchers, the appellant's systematic record-keeping and absence of discrepancies between purchase and sale figures indicated the reliability of the accounts. The tribunal emphasized that the assessing officer could have cross-verified the stock with sales records to detect any purchase suppression, which was not done. Therefore, the tribunal concluded that the appellant's accounts could not be rejected solely on the grounds of unsupported purchase vouchers.In the final decision, the tribunal allowed the appeal, accepting the returned figures and overturning the enhancement of Rs. 10,000. The assessing officer was directed to recalculate the tax payable based on the returned figures, considering deductions for sales to registered dealers, sales tax realized, and tax-free sales. Any excess tax paid by the appellant was to be refunded after the recalculation. The judgment emphasized the importance of maintaining meticulous records and the need for verifiable discrepancies before rejecting accounts based on unsupported vouchers.