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1991 Supreme(Mad) 728
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE KANAKARAJ & THE HONOURABLE MR. JUSTICE AGGRAWAL
M. Kasirajan and Brothers - Appellant
Versus
State of Tamil Nadu - Respondents
Tax Case No. 1361 of 1982 (Appeal No. 91 of 1982)
Decided On : 01 October 1991
The court emphasized the importance of maintaining proper accounts and records to prevent suppression of turnover and evasion of taxes.
Headnote:
TAMIL NADU GENERAL SALES TAX ACT, 1959 - SECTION 12(3) - SUPPRESSION OF TURNOVER - PENALTY - BEST JUDGMENT ASSESSMENT - AFFIDAVITS FILED BY AGRICULTURISTS - EXPLANATION FOR ENTRIES IN SLIPS OF PAPER - ACCEPTANCE BY APPELLATE AUTHORITY - DISBELIEF BY JOINT COMMISSIONER - RESTORATION OF ASSESSING AUTHORITY'S ORDER - UPHELD.
Fact of the Case:
The appellants, dealers in tamarind, jaggery, grams, etc., reported a total and taxable turnover of Rs. 5, 67, 777.55 and Rs. 3, 76, 836.71, respectively for the assessment year 1976-77. During an inspection of their business premises, three slips were recovered, indicating purchase omission and sale value estimation of Rs. 20, 115. The assessing authority added this suppressed turnover and levied a penalty under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959. The appellate authority upheld the addition of Rs. 1, 595 based on the slips but deleted the balance of Rs. 18, 520 and the penalty. The Joint Commissioner, in suo motu proceedings, restored the assessing authority's order.
Finding of the Court:
The court found that the assessees' explanation for the entries in the slips of paper, based on affidavits filed by agriculturists, was an afterthought and not credible. The court held that the entries in the slips of paper had not been accounted for in the regular books and that the assessees were attempting to escape the best of judgment assessment.
Issues: 1. Whether the explanation provided by the assessees for the entries in the slips of paper, based on affidavits filed by agriculturists, was credible. 2. Whether the entries in the slips of paper had been accounted for in the regular books.
Ratio Decidendi: The court held that the assessees' explanation was not credible as it was an afterthought and did not tally with the statement given by the partner immediately after the inspection. The court also found that the entries in the slips of paper had not been accounted for in the regular books, indicating an attempt to evade taxes.
Final Decision: The court upheld the order of the Joint Commissioner, which restored the assessing authority's order. The appeal was dismissed with no order as to costs.
KANAKARAJ, J.
The appellants are dealers in tamarind, jaggery, grams, etc. They had reported a total and taxable turnover of Rs. 5, 67, 777.55 and Rs. 3, 76, 836.71, respectively for the assessment year 1976-77. When the accounts were checked it was found that there were certain discrepancies due to non-inclusion of second purchase of jaggery and second sales of grams. Further there was an inspection of the business premises on March 27, 1977 and three slips were recovered. From two of the slips purchase omission was noticed and the sale value was estimated at Rs. 20, 115. To the extent of the suppression penalty was levied under section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called "the Act") to the tune of Rs. 1, 207. After notice to the assessee, the assessing authority fixed the total and taxable turnover to the best of his judgment by adding the said sum of Rs. 20, 115 as suppressed turnover. On appeal, the appellate authority sustained the addition based on the slips recovered from the place of business only to the extent of Rs. 1, 595 and deleted the balance of Rs. 18, 520. He also deleted the levy of penalty. In suo motu proceedings taken under section 34 of the Act, the Joint Commissioner set aside the order of the appellate authority and restored that of the assessing authority. The assessees have filed this appeal against the order of the Joint Commissioner.
2. The contention of the learned counsel for the appellants is that affidavits had been filed from the agriculturists to prove that they had sent the goods under certain lucky names and the assessees had noted the quantity promised to be supplied in slips of paper and that they had not sent the entire quantity of goods promised by them at the time of visit of the assessees. According to the assessees, if the contents of the affidavit are accepted no suppression can be deduced from the slips recovered at the time of inspection. To understand the case of the assessees we would do well to give the details contained in the slips 1 and 2 recovered at the time of inspection.
"Slip No. 1 : Purchases tamarind
26-3-77 Mahendiran
Kokilapuram
45 chippam tamarind 3, 375.00
Slip No. 2 :
Gouri vilas 44 Chippam 3, 410.00
V.G. 28 Chippam 2, 128.00
Mahendiran 94 Chippam 7, 191.00
P.V. 23 Chippam 1, 219.00
Raju 3 Chippam 168.00
--------- Purchase omission 17, 491.00
Add 15 per cent gross profit 2, 623.65
--------- Sale value estimated 20, 114.65 or 20, 115" *
At the time of inspection on March 27, 1977, a statement was recorded from the assessees and that statement did not contain any explanation for the entries in the slips of the paper. Subsequently on April 6, 1977, one of the partners had been examined with reference to the slips. In that statement it was explained that at the time of visit of the partner, the agriculturists had agreed to send certain quantity of tamarind against certain names and that the entire quantity promised had not been received by the assessees. The slips only contain such entries based on the promise of the agriculturists. The assessing authority found that there was no correlation between the entries in the account book with the names mentioned in the slips of paper. A few days before the appeal was heard on September 20, 1978, the affidavits of certain agriculturists were filed before the appellate authority. With a view to explain the entries in the slips of paper by name Mahendiran and Gouri vilas affidavits purported to say that the agriculturists would send tamarind in certain lucky names called "Mahendiran and Gouri vilas". Even here the affidavits proceeded to say that they had not sent the entire goods promised by them. According to the averments in the affidavits, slips of paper contained entries made by the assessees at the time of his visit to the respective agriculturists. The appellate authority proceeded to accept this explanation and deleted the turnover of Rs. 18, 520, which was based on entries against Mahend
