Sardar Mini Rice Mill vs Commissioner, Trade Tax, U.P., Lucknow

Dr. Satish Chandra, J.—The present revision has been filed u/s 11 of the U.P. Trade Tax Act, 1948 against the order dated December 19, 2006 passed by the Trade Tax Tribunal, Lucknow, in Appeal No. 19 of 2005 pertaining to assessment year 2002-03. The brief facts of the case are that the revisionist is a proprietor firm and during the assessment year under consideration, it was dealing in manufacturing and trading of rice and rice bran. A survey was conducted in the business premises of the assessee on March 15, 2003. Neither any accountant nor the proprietor was available on the spot during the survey. The aged father of the proprietor was present who stated that the proprietor has gone outside. The books of account produced later but were rejected. So, the assessing officer made the addition on the estimate basis by rejecting the books of account.

With this background, Sri M.M. Dewan, learned counsel for the revisionist, states that at the time of survey, no books of account were found. The stock of wheat, rice and rice bran was noted down by ignoring the stock lying in a separate godown. At the time of survey, neither the proprietor of the firm nor his muneem (accountant) was present in the business premises. The father of the proprietor, who was aged about 75 year old, was present in the business premises but he had no knowledge about the accounts of the firm. In these circumstances, the books of account were not produced for which there was genuine reason and the account books cannot be rejected on this ground. The books of account were produced later on but the assessing officer has rejected it. He has drawn the attention to the stock found by the survey officer as well as mentioned in the books of account. He submits that the difference in stocks is due to the reason that some stock was lying in a separate godown. The survey team has taken less weight of loose bags. Thus, there was no difference at all. He also mentioned that the survey team had not got these stocks physically weighed at the time of survey and the assistant officer has wrongly estimated the weight of 30 quintals in 30 loose bags which were not full and were unpacked. The survey team counted a number of bags without taking the weight of each bag.

He continued to argue by mentioning that day-to-day manufacturing account has been maintained which contains date wise purchase, consumption and stock of paddy as well as date-wise production, sale and stock of different varieties of rice. A part of manufactured rice has to be given to the State Government as levy which is duly recorded in a separate levy rice register. This register is checked and signed by the officers of marketing department from time to time. The levy stock register was checked and signed by senior marketing inspector on March 16, 2003 when stock of rice had been recorded.

Lastly, he submits that the stock of rice and rice bran recorded in the books of account are much higher than the stocks recorded by the surveying team which shows bona fide of the revisionist since he would be bound to disclose the sales of all these stocks as and when they are sold. Thus, there was no question of any possible suppression of production or sales.

On the other hand, learned standing counsel relied on the order passed by the lower authority as well as the impugned order passed by the Tribunal.

I have heard learned counsel for both the parties at length and gone through the material available on record.

From the survey diary (annexure No. 9A), it appears that on the day of survey, the books of account were not available at the business premises of the assessee. The owner of the firm Sri Manjeet Singh had gone out of station. The stock was noted down on separate sheet pertaining to rice and paddy. In the absence of the books of account, it was not verified but the fact remains that, at a later stage, the books of account produced by the assessee were not accepted by the assessing officer and the same were rejected without assigning any reason. In the case of Ashoka Enterprises v. Commissioner of Sales Tax (1984) UPTC 854 (All), it was observed that the failure of the assessee to show the books at the time of survey will not warrant rejection of the books. The position may be different in the cases where mala fide of the assessee is established in not showing the books at the time of survey, then surely an adverse inference will be drawn against the assessee, but not in the other case where the books could not be shown at the time of survey for good reasons.

Further, in the case of Devi Lal & Sons v. Commissioner of Sales Tax (1984) UPTC 1073 (All), it was observed that the books cannot be rejected merely for the reason that on first survey, the rokar and khata could not be made available. The case of the assessee was that the part time munim had taken the khata and cash book to post the latter in the ledger. Mere fact that the khata and rokar were not available at the shop at the time of first survey, is no ground to reject the books, though the revenue, if any other defect is found in the books, can certainly draw adverse inference against the assessee.

In the instant case, there is no finding by the Tribunal that the assessee failed to show the cash book at the time of survey with mala fide intention. On these facts, the Tribunal was in error in affirming the finding of the authority below rejecting the books only on the ground that the cash book could not be shown at the time of survey.

Therefore, I hold that the books version of the assessee on the facts and circumstances of the case should have been accepted. Hence, I direct the assessing officer to accept the books of account maintained by the assessee and make de novo assessment accordingly. For the purpose, all the orders passed by the authorities below as well as the Tribunal are set aside. In the result, the revision is allowed.