CHILTON REFRIGERATION Vs. STATE OF KERALA
HIGH COURT OF KERALA
STATE OF KERALA
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G. SIVARAJAN, J. -
(1.) THE matter arises under the Kerala General Sales Tax Act, 1963 (for short "the Act" ). THE assessee is the revision petitioner. THE assessment year concerned is 1994-95. THE assessee filed return for the said year disclosing a total and taxable turnover of Rs. 1,87. 49,763. 38 and Rs. 1,16,06,942 respectively. THEre was an inspection of the business premises of the assessee on May 26, 1995. THE assessee had also compounded the offence and paid a compounding fee of Rs. 68,492. On the basis of the materials gathered in the inspection and the compounding proceedings the assessing authority rejected the return and estimated the turnover by making an addition of Rs. 13,99,314, i. e. , 3 times the actual suppression of Rs. 4,66,438 found in the inspection. Being aggrieved by the said assessment the assessee filed an appeal before the Additional Deputy Commissioner (Appeals), Agricultural Income-tax and Sales Tax, Ernakulam, who by his order dated June 28, 1997 (annexure 2) upheld the rejection of the accounts but modified the addition equal to the actual suppression found. Both the assessee and the Department took up the matter in appeal before the Tribunal. While upholding the rejection of the books of account considering the appeal filed by the department the Tribunal modified the estimate by sustaining the addition to the extent of 1 and 1/2 times of the suppression found. THE assessee's appeal was dismissed.
(2.) LEARNED counsel for the petitioner submits that there was no inspection of the business place of the assessee during the assessment year, in question and that the alleged suppression found in the inspection conducted by the Intelligence Squad on May 26, 1995 after the close of the assessment year cannot be made use of for assuming that the assessee had practiced similar suppressed transaction for the earlier periods also. The counsel also brought to our notice the various documents relied on for making the addition relating to the year 1995-96.
The learned Government pleader appearing for the respondent, on the other hand, submits that in the inspection conducted by the Intelligence Squad on May 26, 1995 the unaccounted transactions of the year 1994-95 was also found and the assessee had admitted the said offence by paying a compounding fee of Rs. 68,492. The Government pleader submits that this will show a pattern of suppression and therefore the assessing authority was justified in making the addition of 3 times the actual suppression found. The Government Pleader submits that the Tribunal had limited the addition to 1 and 1/2. times the suppression as against three times made by the assessing authority.
As we have already noted the only basis on which the addition of Rs. 13,99,314 made was the actual suppression of Rs. 4,66,438 found at the time of inspection and the compounding of the offence by paying Rs. 68,492. Admittedly the inspection was made after the close of the assessment year and during the assessment year 1995-96. It is also an admitted position that there was no inspection of the business premises of the assessee during the assessment year 1994-95. No other discrepancy in the accounts was also found. Since the only material relied on for making the addition is the materials gathered after the close of the assessment year there was no justification on the part of the assessing authority to surmise that similar unaccounted transaction might have been effected by the assessee during the year 1994-95. This assumption, according to us, is on pure conjectures and surmises. Since the assessee had admitted the offence and paid compounding fee the assessing authority will be justified in adding the sum of Rs. 4,66,438 to the returned turnover. This is what the first appellate authority has done. The Tribunal, according to us, has wrongly relied on the decision of this Court in V. A. Augustaine and Co. v. State of Kerala  36 STC 257. If as a matter of fact an inspection was conducted during the assessment year in question and unaccounted transaction was found there was justification on the part of the assessing authority to presume that similar unaccounted transactions might have been effected for the remaining period also. But such inference cannot be drawn in a case where there was no inspection during the assessment year in question and that the materials relied on for making the addition was obtained after the close of the assessment year. In these circumstances we are of the view that the Tribunal was not justified in interfering with the order of the first appellate authority and in sustaining the addition to the extent of 1 and 1/2 times the actual suppression found. We accordingly set aside the order of the Tribunal in relation to the assessment year 1994-95 and restore the order of the first appellate authority.
(3.) TAX revision case is disposed of as above. Petition disposed of accordingly. .;
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