Darshan Agroils Ltd. vs Commissioner of Trade Tax, U.P., Lucknow

Sudhir Agarwal, J.—In this revision the assessment year in dispute is 1999-2000 under U.P. Trade Tax Act, 1948. The applicant-revisionist (hereinafter referred to as the "Dealer") is engaged in the business of manufacture and sale of edible oil, Tin and plastic containers. For the assessment year 1999-2000 the accounts were not accepted by Assessing Authority and he proceeded to make best judgment assessment vide order dated 19.03.2002 determining Rs. 71,07,413.55 tax under the State tax statute and Rs. 29,500/- under Central Act. There against the Dealer''s First Appeal Nos. 406/2 and 407/2 were dismissed by First Appellate Authority vide order dated 13.06.2002 but the Second Appeal Nos. 295/02 and 294/02 were allowed vide judgment dated 04/13.07.2004 passed by the Trade Tax Tribunal, Aligarh Bench, Aligarh and the matter was remanded to Assessing Authority for predetermination of tax liability. The Assessing Authority passed order on 21.07.2005 on the basis of best judgment assessment and, there against revisionist''s First Appeal Nos. 633/2005 and 634/2005 was partly allowed and the tax liability was reduced to Rs. 63,60,346/- under the Provincial statute and Rs. 14,074/- under Central statute. There against, Revenue preferred second appeals which have been allowed by impugned order dated 16.05.2007. The central dispute relates to alleged purchase of oil and tin containers of Rs. 16,76,94,702.75 from the alleged registered Dealers. The Assessee claimed to have purchased mustered oil worth Rs. 16,04,41,948/- from M/s. B.S. Enterprises, 422 Sewanagar, Ghaziabad and blank tin containers worth Rs. 28,14,550/-. Similarly, from M/s. K.S. Traders, Babu Market, Atta Chowk, Noida he claimed to have purchased mustered oil worth Rs. 60,46,868/- and tin containers worth Rs. 9,42,025/-. A third purchase of mustered oil of Rs. 12,05,888/- and tin containers of Rs. 3,51,400/- alleged to have been purchased from M/s. M.M. Enterprises 43/254 Shivhare Marg, Sikandra, Agra.

The purchase vouchers submitted by Assessee were sought to be verified from the concerned Companies. Notice was issued to Sri Rahul Kumar, Proprietor M/s. B.S. Enterprises, Ghaziabad but it returned with endorsement that Rahul Kumar is not residing at the address given, i.e., 193 L.I.G. Flats E. G.T.B. Enclave, Delhi and has left the house. It was also found that in the accounts of M/s. B.S. Enterprises, Ghaziabad, for the year in question, the firm has not disclosed any tax paid sale to in respect of transactions claimed by revisionist. Similarly, notice issued to Sri Madan Lal, Proprietor, M/s. K.S. Traders, Babu Market, Atta Chowk, Noida was returned with endorsement that he has also left premises. Further the aforesaid firm was found registered only upto 31.03.1998 and thereafter the firm had not submitted any returns. The third firm, i.e., M/s. M.M. Enterprises 43/254 Shivhare Marg, Sikandra, Agra, Proprietor, Sri Jitendra Kumar Sharma when sent notices, was returned by post office with endorsement of "wrong address" and when personal service was sought to be effected, it was informed that the firm was opened just a few days back and had now closed. The registration of said firm, thus was cancelled on 11.10.1999. The Assessing Authority did not accept claim of purchase of aforesaid items on the ground that Dealer failed to prove such purchases and it is also verified from the fact that transport companies through whom he claim to have transported goods were all found non-est and Fictitious.

Sri Piyush Agrawal, learned counsel for the revisionist, contended, when firms in question, wherefrom the Dealer has purchased goods, were found to have registered with Trade Tax Department, it was their responsibility to verify correctness of bill and vouchers issued by those firms and merely because the transport firms were found non-est or fictitious, the best judgment assessment by rejecting purchases claimed by Assessee ought not to have been made particularly when payment was made through account payee cheques. Reliance is placed on a decision of this Court in Kanha Vanaspati Ltd. v. Commissioner of Trade Tax 2002 UPTC 1.

This Court, however, finds that the Tribunal has found that Dealer could not prove that the purchases made were tax paid and also, whether such purchase transaction actually took place or not. His claim that payments were made by account payee cheques has also been examined by Tribunal and it is found that though the firms were at Ghaziabad and Noida etc. but for the purpose of collection of money, accounts were opened at Aligarh in Punjab National Bank and after realization of amount of cheques, the money was withdrawn from bank in cash in just two or three days. The entire inquiry in respect of three firms show and prove that entire transactions were only on paper and fictitious for huge evasion of tax liability.

Sri Piyush Agrawal, Advocate however further said that Proprietor of three firms filed their affidavits in support of the purchase transactions made by revisionist-Dealer but the Tribunal found that addresses mentioned in affidavits of alleged Proprietors of these firms were not verified inasmuch as none of the deponent was found at the address given by them and, therefore, those affidavits also could not be cross checked, hence have not been believed by Tribunal.

It is true that one or the other fact in isolation may not justify a best judgment assessment since the jurisdiction arises only when Assessing Authority finds that the return submitted by Dealer is incorrect or incomplete. The term "incorrect" or "incomplete" includes within its ambit the entries made in the accounts which are not verified and on investigation the department finds bogus and fictitious entries reflecting a mere paper transaction.

In the present case the purchases were shown to have been made by firms at Ghaziabad and Noida but the said firms were found closed when subsequent queries were made and the notices were issued to them. The transaction of payment through bank account is also not in the ordinary course of business inasmuch as the firms claiming their addresses at Noida and Ghaziabad, opened their accounts at Aligarh, collected cheque money and withdrawn the same in quick succession of two to three days and that too in cash. Thirdly the alleged transport companies whereby huge quantity of oil and tin containers were claimed to have been transported from Ghaziabad and Noida to Aligarh, were found non-existing and bogus.

There are all findings of facts recorded by Tribunal and have not been shown perverse or contrary to record. In totality, when various circumstances are considered by Revenue, I do not find that the approach can be said to be illegal or erroneous so as to make a best judgment assessment in the circumstances like present one illegal or unauthorized. In my view, the judgment in Kanha Vanaspati Ltd. (supra), as such, does not help the revisionist in any manner and all the questions of law noticed in para. 31 of the memo of revision which have arisen in the matter, deserve to be answered against revisionist. The revision lacks merit. Dismissed.