M/S M.A. Haleem Sons vs Commissioner, Commercial Tax

Ashwani Kumar Mishra, J.—The assessment proceedings in respect of period 1st April, 2007 to 31st December, 2007, relating to the year 2007-2008, have essentially been challenged, on the ground that the assessee had duly submitted its books of account and return, which have not been doubted by any of the authorities, and therefore, without complying with the requirement of Sub-section 3 of Section 7 of the U.P. Trade Tax Act, 1948, the authorities could not have disbelieved the books of account, and substituted the basis of assessment to the best judgment.

Sri Suyash Agarwal, learned counsel appearing for the revisionist states that though this aspect has been consistently pressed before the authorities and also before the Tribunal, but this aspect has completely been omitted from consideration. It is submitted that before the books of account could be discarded by the authorities, it was imperative that necessary ingredients to attract the provision itself were found to exist, and since the authorities have failed to consider this aspect of the matter, the order of Tribunal cannot be sustained.

Learned Standing Counsel, on the other hand, has made submission to justify the order of the Tribunal. However, on the material aspects relating to assessment on the basis of best judgment, it could not be shown that either the assessee had not produced the books of account, or that it was disbelieved.

Having heard learned counsel for the parties, this Court finds that the authorities under the Act have not cared to examine the provision contained under Section 7(3) of the U.P. Trade Tax Act, 1948, which reads as under :-

"7. Determination of turnover and assessment of tax.- (1) .....

(2) .....

(3) If no return is submitted by the dealer under sub-section (1) within the period prescribed in that behalf or if the return submitted, by him appears to the Assessing Authority to be incorrect or incomplete, the Assessing Authority shall, after making such inquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof:

Provided that before taking such action under this Sub-section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him."

Before the return submitted by the dealer could be discarded, and the best judgment forms the basis for assessment of tax, the authorities are enjoined to return a finding that necessary ingredients to attract Sub-section 3 of Section 7 exists in the facts of the present case. This aspect has completely been omitted from consideration, and as such, the order impugned cannot be sustained.

Consequently, the revision succeeds and is allowed. Order dated 28.3.2012 is set aside. The Tribunal shall ex-examine the matter, in light of the observations made above, keeping in view the provisions of Section 7(3) of the Act, afresh.