M/S NATHU RAM RAMESH KUMAR Vs COMMR.OF DELHI VALUE ADDED TAX
Bench: ANIL R. DAVE,DIPAK MISRA
Case number: C.A. No.-004465-004468 / 2014
Diary number: 25096 / 2009
Advocates: Vs
SURYA KANT
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NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOs. 4465-4468 OF 2014 (Arising out of SLP (C) Nos.22912-22915 of 2009)
M/s Nathu Ram Ramesh Kumar … Appellant
Versus
Commr. of Delhi Value Added Tax … Respondent
J U D G M E N T
Anil R. Dave, J.
1. Leave granted.
2. Being aggrieved by the judgment delivered by the High
Court of Delhi in STC Nos.1 and 2 of 2008 and CM Nos.2161
and 2162 of 2008, these appeals have been filed by the
appellant assessee. The assessee has been aggrieved by
the assessment orders as well as the orders of penalty. As
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both the appeals pertain to the assessee-appellant, at the
request of the learned counsel, they were heard together.
3. The facts giving rise to the present litigation, in a
nutshell, are as under :
The appellant - assessee has been registered under the
Delhi Sales Tax Act, 1975 (hereinafter referred to as the
‘Act’) as well as under the Delhi Value Added Tax, 2004 and
is carrying on the business of manufacture and sale of
sweets, namkeens and other eatables. On 9th March, 2000
and 10th March, 2000, officers from the office of the
Commissioner of Sales Tax had visited business premises of
the appellant-firm and had recorded statements of partners
of the appellant-firm and had also checked total cash inflow
on those days. On those two days, sale proceeds were
Rs.2,13,974/- (Rupees two lac thirteen thousand nine
hundred and seventy four only) and Rs.1,98,009/- (Rupees
one lac ninety eight thousand and nine only) respectively.
At the time of assessment for the Assessment Year
1999-2000, it was found by the Assessing Officer that the
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assessee had not shown its income correctly and therefore,
the Assessing Officer had taken into account the facts
gathered on the aforesaid two days for the purpose of
assessing total sales. On the basis of the gross receipts of
sale effected on the aforestated two days, average receipts
per day had been calculated and the Assessing Officer had
come to a conclusion that the sale proceeds of the assessee
for the relevant year was Rs.7,51,86,350/- (Rupees seven
crore fifty one lacs eighty six thousand three hundred and
fifty only). Before coming to the said conclusion, the
assessee was given an opportunity to explain its books of
accounts, as there was substantial discrepancy between the
receipts shown in the books of accounts and the gross
receipts which were actually found on the aforestated two
days. It was, prima facie, believed by the Assessing Officer
that the assessee had not given accurate details about the
gross receipts.
Similarly for the Assessment Year 2000-2001, on
24.10.2000 also there was a surprise visit to the place of
business of the appellant-assessee and even on that day it
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was found by the officers that there was discrepancy in cash
on hand and cash as per books of accounts. Moreover, they
also found that there was discrepancy in stock as the actual
stock and stock as per books of accounts were not same.
Thus, once again it was found that the books of accounts
maintained by the appellant-assessee were not in order.
In spite of issuance of notice and giving hearing to the
appellant-assessee firm, sufficient explanation was not
provided to the Assessing Officer and therefore, assessment
for Assessment Year 1999-2000 was made under Section
23(3) of the Act. As the Assessing Officer had come to a
conclusion that correct books of accounts had not been
maintained, penalty was also imposed upon the assessee by
assessment order dated 31.12.2001 for the said assessment
year. Similarly, for the Assessment-Year 2000-2001 also, the
books of accounts had not been maintained properly. In
view of the said fact the Assessing Officer had taken into
account figures of sales arrived at by him for the Assessment
Year 1999-2000 and had added 10% thereon as that was
considered to be a normal growth of the business in normal
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circumstances, thereby arriving at gross sales for the
Assessment Year 2000-2001.
Being aggrieved by the above mentioned assessment
orders, the assessee had preferred appeals before the
Commissioner of Sales Tax, which had been dismissed by an
order dated 13.11.2003 and therefore, the assessee had
preferred appeals before the Appellate Tribunal of Sales Tax,
which had also been dismissed by a common order dated
03.11.2004.
Thereafter, the appellant-assessee had approached the
High Court by filing STC Nos.1 and 2 of 2008. The High
Court was also pleased to dismiss the said Reference Cases
after giving hearing to the concerned parties by a common
judgment dated 19th May, 2009 as no question of law was
involved in the said cases. The said judgment has been
challenged in the present appeals.
4. The learned counsel appearing for the appellant-
assessee had mainly submitted that the assessment orders
were passed under Section 23(3) of the Act as the
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authorities were not satisfied with the details furnished by
the appellant-assessee. In the aforestated circumstances, it
was obligatory on the part of the assessing authority to issue
notice and give hearing to the assessee so that appropriate
explanation could be given to the authorities by the
assessee. As no notice was given to the assessee before the
assessment, the impugned assessment orders as well as the
orders passed in appeal are bad in law. Thereafter, it had
been submitted that merely on the basis of two visits to the
business place of the appellant-assessee, the Assessing
Officer could not have jumped to a conclusion that the sale
proceeds received on those two days were standard or
normal and therefore, on the basis of those sale proceeds,
assessments could not have been made. It had been further
submitted that in the business of the assessee, being a
dealer in eatables, normally there would be huge variation in
sale on different days. On a particular day, sale proceeds
could be more than rest of the days and therefore, on the
basis of some selected days, i.e., 9th and 10th March, 2000
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and 24th October, 2000, the Assessing Officer could not have
made the assessments.
5. It had been further submitted that the penalty imposed
upon the appellant-assessee was based on guess work or
conjectures. There was no basis for the Assessing Officer to
believe that the books of accounts maintained by the
assessee were not correct and the facts found on those
selected days when there were surprise visits by the officers
of the Department were normal, i.e., the assessee was every
day getting the same amount by way of sale of eatables.
Moreover, adjustments regarding the amount of tax
recovered had not been made while calculating the
estimated sales.
6. For the aforestated submissions, the learned counsel
appearing for the appellant-assessee had submitted that the
judgment of the High Court, confirming the assessment
orders, should be quashed and set aside and even the orders
imposing penalty should be quashed.
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7. On the other hand, the learned counsel appearing for
the Revenue had submitted that it was apparent that the
appellant-assessee was not correctly showing all
transactions in his books of accounts. The said fact could be
very well seen when the representatives of the Department
had visited the place of business of the assessee on 9 th and
10th March, 2000 and on 24th October, 2000. The sale
proceeds, which had been meticulously recorded on those
two days in accounting year 1999-2000 were Rs.2,13,974/-
and Rs.1,98,009/- respectively whereas total sales for the
said year was much less. In the aforestated circumstances,
average sale of the aforestated two days was calculated and
multiplying the same by 365 (days of the year), the
Department had arrived at a figure of estimated sales for the
year 1999-2000 and similarly after making a reasonable
addition of 10%, sale for the Assessment Year 2000-2001
had been arrived at.
8. In spite of the notice issued to the assessee for giving
explanation with regard to the discrepancy, the assessee
could not give any satisfactory explanation and therefore,
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the Assessing Officer was constrained to presume that the
books of accounts were not maintained properly by the
appellant- assessee.
9. As the Assessing Officer had come to the conclusion
that the books of accounts had not been properly maintained
with an oblique motive, penalty was rightly imposed upon
the assessee and the quantum of penalty imposed was also
just and proper.
10. For the aforestated reasons, the learned counsel
appearing for the Revenue had submitted that the
assessment orders, which had been affirmed by all the
authorities below and the High Court are just and proper and
they need not be interfered with.
11. We had heard the learned counsel for the parties and
had also considered the relevant orders as well as legal
submissions made by the counsel.
12. We do not find any substance in the submissions made
on behalf of the appellant-assessee and therefore, we are
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not inclined to allow the appeals for the reasons stated
hereinbelow :
(i) The appellant-assessee is making and selling
sweets, namkeens and other eatables. It appears from
the record that when an individual customer was
buying eatables of a nominal value, possibly bill was
not being issued. There was no specific method
whereby each and every receipt from the buyers was
recorded by the assessee. In the aforestated
circumstances, possibly due to some doubt, which
might have arisen, a special search or inspection was
made on 9th and 10th March, 2000 and total sale
proceeds had been meticulously recorded and
calculated, which have been stated hereinabove. On
the basis of the receipts of those two days, considering
them as a representative sample, the Assessing Officer
had come to a conclusion that the sale proceeds or
sales of the appellant-assessee for the year should
have been a particular amount and, in fact, the amount
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reflected in the books of accounts was much less than
the calculations arrived at by the Assessing Officer.
(ii) It is pertinent to note that the Assessing Officer did
not jump to a conclusion without any rhyme or reason.
The Assessing Officer had called upon the assessee to
explain the difference but the assessee could not or did
not give sufficient explanation as to how the total sale
on the basis of the average daily sale arrived at by the
Assessing Officer was not correct. One can very well
presume that in case of a dealer dealing in eatables,
and specially sweets and namkeens, on a particular day
like a holiday or on account of some festivity, total sale
can be more than other days. For example, sale would
normally be more on Saturdays, Sundays and other
holidays because more people would be visiting such
eateries. In the instant case, had those two days, when
business premises of the assessee was inspected and
the sale proceeds were recorded, been some special
days, the assessee could have placed those special
facts before the Assessing Officer, but nothing of that
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sort was done. In the circumstances, in our opinion, the
Assessing Officer had rightly come to the conclusion
that the books of accounts maintained by the assessee
were not showing correct sales and therefore, the
conclusion arrived at by him cannot be said to be
incorrect. There was a reasonable basis for him to
arrive at the said conclusion, especially when the
assessee did not offer any satisfactory explanation in
spite of issuance of notice.
(iii) The submission made by the learned counsel
appearing for the appellant-assessee that no notice was
issued, as required under the Act, before framing the
assessment is also not correct. The assessment orders
refer to notices issued to the assessee and they also
record the fact that no satisfactory explanation had
been offered by the appellant-assessee to make out a
case that there was some special reason for which sale
of sweets, namkeen etc. on 9th and 10th March, 2000
was exceptionally more.
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(iv) Once the Assessing Officer had rightly come to the
conclusion that the books of accounts were not properly
maintained and were not reflecting each and every
transaction, in our opinion, the Assessing Officer had
rightly come to a conclusion that total possible sale was
much higher and the conclusion so arrived at was
based on sound reasons. We also do not agree with the
learned counsel for the assessee that proper
adjustments regarding sales tax had not been made by
the Assessing Officer in the process of the assessment.
(v) Once it is found that with some oblique motive,
effort was made to show lesser sale proceeds than the
actual, the orders imposing penalty can not be
questioned. We are, therefore, not inclined to interfere
even with the quantum of penalty.
13. For the aforestated reasons, in our opinion, the
impugned judgment delivered by the High Court is just and
proper, which does not require any interference and
therefore, the appeals are dismissed with no order as to
costs.
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…………………………….,J.
(Anil R. Dave)
…………………………….,J. (Dipak Misra)
New Delhi; April 9, 2014
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