State of Tamil Nadu vs D.T. Kaliaperumal Naidu and Company

Thanikkachalam, J.—The department is the petitioner herein. The assessee is a dealer in provision and fertilisers for the assessment year

1978-79. The assessee reported a total and taxable turnover of Rs. 1,36,44,616 and Rs. 32,64,408 respectively. The assessing officer found that

there were two inspections during the year under consideration and large scale suppressions were noticed. On April 25, 1978 suppression was

noticed to the tune of Rs. 570. The assessing officer added an addition of Rs. 5,130 being nine times the actual suppression. During the inspection

on March 22, 1979 suppressions were noticed on several items. The assessing officer made addition equal to two times the actual suppression.

The total suppression was fixed at Rs. 6,53,412 and the assessing officer also made an addition of Rs. 2,000 towards defects in the accounts.

Finally, the assessing officer, determined the total and taxable turnover at Rs. 1,44,84,936 and Rs. 39,21,841 respectively. The assessing officer

also levied a penalty of Rs. 12,772 u/s 12(3) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as ""the Act"") for the

suppression.

On appeal, the Appellate Assistant Commissioner gave partial relief. Aggrieved, the assessee filed a second appeal before the Appellate

Tribunal. The department also filed enhancement petition.

On considering the facts arising in this case, the Tribunal made an ad hoc addition of Rs. 5,000 and another addition of Rs. 5,000 for probable

suppression. The penalty was reduced to Rs. 200 u/s 12(3) of the Act. The enhancement petition filed by the Revenue was dismissed and

consequently there was no question of levy of additional sales tax.

It is against this order, the department is in revision before this Court. The department is questioning the order passed by the Tribunal in the

quantum appeal, enhancement petition and penalty appeal.

Learned Additional Government Pleader (Taxes) submitted that the assessee posted the sale entries after the inspection was over. The bills

were prepared subsequent to the inspection. The day book chittai and sale bills were manipulated. Therefore, according to learned Additional

Government Pleader (Taxes), the assessment made by the assessing officer should be accepted. With regard to the enhancement petition, the

learned Additional Government Pleader (Taxes) submitted that but for the timely inspection and search made by the department, the assessee

would not have come forward to submit the suppressed turnover for levy of tax. Therefore the actual suppression determined by the assessing

officer, should be sustained.

On the other hand, the case of the assessee was that it maintained separate accounts for taxable and non-taxable goods, that it is not practicable

to maintain separate sales accounts for different kinds of goods handled by the assessee, that the gross profits earned by the assessee is normal,

that the excess stocks noted during the inspection was due to incorrect stock taking by the officer, that the shortage noticed is due to non-posting

of accounts, that cooly payments entered in the slips were taken as suppressions, was pointed out by the assessing officer, in his order, that the

stock difference cannot be treated as suppression, that the assessing officer, himself admitted that the assessee raised sale bills and made entries in

the accounts and that all the sales have been accounted for in the accounts and included in the monthly returns. Therefore, it was submitted that the

suppression alleged by the assessing officer is unwarranted and the penalty is not justified.

The Tribunal pointed out that the difference in stocks were treated as suppressions by the assessing Officer. According to the Tribunal, if the

sale bills are taken into account, there will be no shortage or excessive stocks. The assessee has explained most of the stock differences. The

Tribunal pointed out that the sales have been included in the monthly returns and tax due on the sales have been paid by the assessee. According to

the Tribunal, the department has not disproved the explanation offered by the assessee. The transactions have been supported by valid sale bills.

Most of the sales are second sales in the State. The assessing officer has treated the second sales as representing first sales and subjected the

assessee to tax. The Tribunal pointed out that the department has not proved that the assessee manipulated the accounts subsequent to the

inspection. Therefore ultimately the Tribunal came to the conclusion that the assessee has explained more than 90 per cent of the alleged

suppression. Considering all these aspects, the Tribunal held that the suppression would not exceed Rs. 5,000 in any case. Out of the reported

total turnover of Rs. 1,36,44,616 the taxable turnover amount to Rs. 32,64,408 only. Hence, the Tribunal fixed the sale suppressions reasonably

at Rs. 5,000 taxable at 4 per cent. Considering the fact that the sales during the year are mostly second sales and there was only a small extent of

stock discrepancies, another addition of Rs. 5,000 was made as ad hoc addition. Considering the nature of quantum of suppressions, the Tribunal

reasonably refixed the penalty at Rs. 200 u/s 12(3) of the Act. Accordingly the enhancement petition was dismissed. The reasons given by the

Tribunal in determining the addition towards the suppressed turnover in view of the discrepancies noticed, appear to be quite convincing.

Therefore, we are not inclined to interfere with the suppressed turnover determined and the penalty refixed by the Tribunal. In view of the

abovesaid order passed in the quantum appeal as well as the enhancement petition, the question of levy of additional sales tax does not arise. Thus,

inasmuch, we see no infirmity, in the order passed by the Tribunal in the quantum appeal, in the penalty appeal and in the enhancement petition, we

are not inclined to interfere with the order passed by the Tribunal.

In the result, the revisions are dismissed. No costs.

Petition dismissed.