TaxTMI 
TaxTMI 
2016 (7) TMI 881
X X X X Extracts X X X X
X X X X Extracts X X X X
....spect of the sale of jute bags valued at Rs. 20,00,000/-. The disputed tax liability was pegged as Rs. 1,20,000/-. The undisputed facts appear to be that the revisionist, who is a registered dealer under the provisions of the U.P. Trade Tax Act, 1948 Act was engaged in the manufacture of jute bags. Survey of his business premises is stated to have taken place on 29 April 1998 during the course of which a provisional balance sheet relating to the assessment year 1997-98 was seized. In the course of survey, the assessee is stated to have explained the balance sheet to be a rough and provisional statement of accounts and that it did not represent the actual books of accounts which was maintained by the assessee in terms of the provisions of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the rough/provisional balance sheet. Learned Standing Counsel on the other hand has contended that great variance was found between the rough/provisional balance sheet and the audited books of accounts. In that view of the matter, it is his submission that the Tribunal has clearly acted in accordance with law in endorsing the view taken by the assessing authority. Admittedly, the issue of rejection of books of accounts by the registered dealer shall stand governed by the provisions of sub section (3) of Section 7 of the 1948 Act. The said provision reads as follows: "If no return is submitted be the dealer under sub-section (1) within the period prescribed in that behalf or if the return submitted by him appears to the assessing authori....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the opinion of this Court, there did not exist a circumstance which warranted rejection of books of accounts . The audited balance sheet would have to be faulted after a due enquiry and with reference to other contemporaneous materials which were maintained by the dealer. A rejection of the books of account of a dealer cannot be the outcome of a on whimsical or capricious exercise of power. More fundamentally, this Court finds that in terms of sub-section (3) even if the assessing authority were to arrive at a conclusion that the returns were incorrect and incomplete, it was further obliged to undertake an enquiry to "determine" the turnover of the dealer to the "best of his judgment". When the provision employs the words "determine" and "....