Hussain and Sons vs State of Tamil Nadu

P. Jyothimani, J.—The Revenue has preferred this tax case revision as against the order dated September 15, 2000 passed by the Tamil Nadu Sales Tax Appellate Tribunal (Main Bench), Chennai in TA No. 1112 of 1999, for the assessment year 1993-94. This revision was admitted by this court on the following substantial questions of law:

(1) Whether the Appellate Tribunal was justified in law in sustaining the best judgment made by the assessing authority to the extent of Rs. 16.50 lakhs even though the assessing authority had not complied with the specific directions given by the Appellate Tribunal to go into matter in depth of the various records recovered on March 7, 1994 by examining each entry in them and pass an order in accordance with law after affording reasonable opportunity to the petitioner to explain the nature of the slips, etc., and entries thereon?

(2) Whether the Appellate Tribunal was justified in law in making adhoc addition of 50 per cent of the alleged actual suppression without having due regard to the fact that the inspection of the petitioner''s shop by the authorities was at the fag end of the year?

(3) Whether the Appellate Tribunal was justified in law in sustaining the maximum penalty calculated on the tax due on the alleged actual suppression as estimated by the assessing authority ignoring the ratio of various decisions of the High Court on the issue of penalty?

In and by the impugned order, the Sales Tax Appellate Tribunal, while modifying the order of the assessing officer has estimated the turnover at Rs. 16,53,921 in respect of the assessment year 1993-94 and also imposed a penalty of Rs. 56,880. It is seen that the assessee, who has started the jewellery business and also closed it on the same year, namely, assessment year 1993-94 was originally assessed by the assessing officer on September 16, 1994 in respect of the taxable turnover determined at Rs. 44,11,096 and a penalty of Rs. 2,90,207 was imposed. The said order was modified by the Appellate Assistant Commissioner (CT), on appeal by the Department, vide order dated May 19, 1995, and the taxable turnover was refixed at Rs. 8,21,857 and the penalty also was refixed at Rs. 32,214. On appeal to the Sales Tax Appellate Tribunal, the Tribunal by order dated September 29, 1997, remanded the matter for fresh disposal by the assessing officer, namely, the Deputy Commercial Tax Officer.

The Deputy Commercial Tax Officer, on remand, has arrived the taxable turnover at Rs. 44,11,096 and accordingly, imposed the penalty at Rs. 2,90,207, vide order dated September 15,1998, and thereby confirmed the original assessment order.

On appeal to the Appellate Assistant Commissioner, the taxable turnover was reduced to Rs. 22,05,548 and the penalty was also reduced to Rs. 87,263. On further appeal to the Sales Tax Appellate Tribunal, by the impugned order, the Tribunal has further reduced the taxable turnover and estimated the turnover at Rs. 16,53,921 and reduced the penalty to Rs. 55,880. It is as against the said order, the assessee has filed the present revision.

It is an admitted fact that the assessee, who was originally a polisher, has started jewellery business in the year 1993-94 and closed it in the year and the assessment came to be made on the basis of certain inspection stated to be conducted on March 7, 1994 and 305 grams of jewels were said to be seized. It was the main contention of the learned counsel for the petitioner that the place where the assessee was carrying on business in jewellery is a small town, namely, Kattumannarkoil, where there are only three or four jewellers and no one of them had the taxable turnover exceeding rupees one lakh at any point of time. Therefore, according to the assessee, the entire exercise by the authorities concerned is not on proper perspective.

On direction from this court to find out about the other jewellers in the area concerned, the learned Special Government Pleader would submit that there is one other jeweller, namely, Habeef Jewellery, at No. 11, Kacherry Street, Kattumannarkoil, whose turnover was shown as Rs. 4,00,000.

The impugned assessment is on estimation. Taking note of the fact that in respect of one other jeweller in the area concerned, as it is reported by the learned Special Government Pleader, the turnover was only Rs. 4 lakhs, we are of the view that in the interest of justice, the turnover of the assessee could be fixed at Rs. 5 lakhs.

In respect of the tax already paid by the assessee, the learned Special Government Pleader has furnished the following particulars:

In as much as we have arrived at the estimated turnover of the assessee at Rs. 5,00,000 (rupees five lakhs), the impugned order of the Sales Tax Appellate Tribunal stands modified to the extent that the taxable turnover of the assessee could be fixed Rs. 5,00,000, and by applying the ratio followed by the authority below, out of the said sum of Rs. 5,00,000, Rs. 2,00,000 (rupees two lakhs) shall be assessed at one per cent and the remaining Rs. 3,00,000 (rupees three lakhs) shall be assessed at three per cent. Accordingly, the total tax payable by the assessee shall be arrived at. Since the assessee has already paid a sum of Rs. 19,763 towards tax and a sum of Rs. 715 towards surcharge, the assessee is entitled for the refund of the excess amount, if any, paid by it. The assessing officer shall calculate accordingly and refund the excess amount, if any, to the assessee to which it is entitled, without any interest. Since the entire assessment is on estimate, there is no question of imposing penalty. In such view of the matter, the penalty portion of the impugned order shall stand set aside. In the result, the tax case revision is ordered accordingly. However, there is no order as to costs.