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Goel Industries Pvt. Ltd.,C.B.Gang, Bareilly v. Commissioner, Trade Tax, U.P.Lucknow - SALES/TRADE TAX REVISION No. 688 of 2006  RD-AH 15936 (13 September 2006)
TRADE TAX REVISION NO.688 of 2006.
Goel Industries Pvt. Ltd., C.B.Gang, Bareilly. Applicant
The Commissioner, Trade Tax, U.P. Lucknow Opp.Party.
Hon'ble Rajes Kumar, J.
Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 25th March, 2006 relating to the assessment year, 1999-2000.
Applicant was engaged in the business of manufacture and sales of Kacha and kaththa. Applicant claimed to have maintained books of account in the regular course of business. Manufacturing accounts have also been maintained in form of stock register. Applicant had disclosed taxable turnover at Rs.19, 21,050/-. Assessing authority rejected the books of account and estimated the suppressed sale of Kaththa and kachch at Rs. 20 lacs and the suppressed purchases of Khair wood from unregistered dealer at Rs.10 lacs. Applicant filed appeal before the Deputy Commissioner (Appeals) Trade Tax, Bareilly, which has been allowed in part. Appellate authority upheld the rejection of the books of account, but estimated suppressed sales of Kachch and kaththa at Rs. 5lacs and purchases of Khair at Rs. 3 lacs. Being aggrieved by the order of the first appellate authority, applicant as well as Commissioner of Trade Tax filed appeals before the Tribunal. Tribunal by the impugned order rejected the appeal of the applicant and has partly allowed the appeal filed by the Commissioner of Trade Tax. Tribunal has estimated the suppressed sales of Kachch and Kaththa at Rs. 10 lacs and the turnover of the purchases of Khair at Rs. 5 lacs. Being aggrieved by the order of the Tribunal, present revision has been filed.
Heard learned counsel for the parties.
Books of account of the applicant have been mainly rejected on the ground that adverse material was found at the time of survey dated 25th August 1999. As per stock register written upto 18.8.1999, it was found that 127 petties Kaththa have been manufactured. Assessing authority observed that one peti consists of 20 kgs of Kaththa and thus, there was a manufacturing of 2540 kgs of Kaththa. It has also been observed that for the manufacturing of dry Kaththa, 21 days take place. On this basis, it has been held that for the manufacturing of 2540 kgs of Kaththa upto 18.08.1999, Khair wood would have been used by the end of July, 1999. It was found that upto July, 1999, Khair wood to the extent of 260 quintals were only used out of which 980 kgs Kaththa could be manufactured. In this way, it has been inferred that for the manufacturing of 1560 Kgs Kaththa (2540-980 kg) Khair wood to the extent of 2184 quintal must have been purchased outside the books of account. Applicant explained that there was 10,000 kgs loose kaththa in stock on 1.4.1999, which have been utilized in the manufacturing of kaththa. This explanation of the applicant was accepted in part by the assessing authority on the ground that the applicant did not maintain any stock register of loose kaththa and was not able to give the details that how much Khair wood have been used in the manufacturing of kaththa. Apart from the aforesaid discrepancy, it was also found that at the time of survey only 54 petis kaththa was found in stock, while as per stock register, there was 59 petis. The difference in the stock of Khair wood was also found. It has also been observed that in the manufacturing of kaththa, kacha is also obtained, but no manufacturing of kacha has been shown during the year under consideration. First appellate authority accepted the explanation of the applicant with regard to 10,000 kgs of loose kaththa, which was available in opening stock, was used in the manufacturing of kaththa. It has been observed that not only in the year under consideration loose kaththa had been shown used in the manufacturing of solid Kaththa, but in the earlier years also, the applicant had shown stock of loose kaththa and had shown the use of such loose kaththa in the manufacturing of solid kaththa. First appellate authority, however, upheld the rejection of the books of account and has drawn adverse inference on account of difference in the stock of Kaththa and Khair found at the time of survey and accordingly, estimated suppressed sales of Kaththa and Kacha at Rs. 5 lacs and Khair wood at Rs. 3 lacs. Tribunal by the impugned order has not accepted the explanation of the applicant that in the manufacturing of dry solid kaththa loose Kaththa had been used and has observed that there should be more production of kaththa and 1540 kgs of kaththa have not been entered in the books of account. Tribunal further observed that applicant could not prove that the loose kaththa was not useable. Tribunal, accordingly, estimated the suppressed sales of Kacha and Kaththa at Rs. 10 lacs and purchases of Khair wood at Rs. 5 lacs. Tribunal also observed that the entry of 10,000 kgs loose kaththa was not found in any stock register and the burden lies upon the applicant to prove that such stock was available.
Learned counsel for the applicant submitted that the aforesaid observations of the Tribunal for rejecting the plea of the applicant that 10,000 loose kaththa was used in the manufacturing of solid kaththa are erroneous and contrary to the record. He submitted that the assessing authority has accepted that 10,000 kgs loose katha was available in stock. It has also been accepted some loose kaththa was used in the manufacturing of solid kaththa, but the plea in entirety has been rejected merely on the ground that the applicant was not able to furnish details that how much loose kaththa was used in the manufacturing of solid kaththa inasmuch as no stock register of such loose kaththa was maintained. He further submitted that the difference in the stock found at the time of survey has also been explained. Learned Standing Counsel relied upon the order of the Tribunal.
Having heard the learned counsel for the parties, I have perused the order of the Tribunal and the authorities below. I find substance in the argument of the learned counsel for the applicant in part. So far as rejection of books of account is concerned, learned counsel for the applicant has not seriously pressed, therefore, the rejection of the books of account is upheld.
So far as the estimate of turnover is concerned, I do not find any reason to interfere with the order of the first appellate authority. Assessing authority has accepted in its assessment order that 10,000 kgs loose kaththa was available in the stock and some loose kaththa was also used in the manufacturing of solid kaththa. Therefore, Tribunal has erred in observing that the entry of 10,000 kgs of loose kaththa was not in the stock register and burden lies upon the applicant to prove that such stock was available. Observation of the Tribunal that 1540 kgs kaththa should be manufactured in excess and same was not entered in the books of account is perverse. From the manufactured kaththa as per stock register up to 18.8.1999, inference was drawn by the assessing authority, that Khair wood must have been purchased outside the books of account. There was no allegation that manufactured kaththa was not shown in the books of account. Observation of the Tribunal that the applicant was not able to prove that loose kaththa was not useable, is without any basis and meaningless. Nowhere, it was the case of the applicant that such loose kaththa was non useable. To the contrary, it was the case of the applicant that that the loose kaththa, which was available in stock, was used in the manufacturing of solid kaththa. In this view of the matter, Tribunal has adjudicated the issue on the wrong premises.
Looking to the entire facts and circumstances of the case, I am of the view that the estimate made by the first appellate authority is reasonable and there was no reason for the Tribunal to interfere.
In the result, revision is allowed in part. The order of the Tribunal dated 25th March, 2006 is set aside and the order of the first appellate authority dated 27th February, 2006 is restored.
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