Entire Books of Accounts cannot be rejected due to minor discrepancy: HC

This revision under Section 58 of the Value Added Tax Act, 2005 (hereinafter called as ‘VAT Act’) has been filed assailing the order of the Tribunal dated 27.02.2016.

The revision was admitted vide order dated 29.11.2016 on the following substantial question of law:-

“(1) Whether in view of the facts and circumstances of the case, the Tribunal being a last court of fact, accepted all the explanation of the applicant, but still was justified in fixing the suppressed sale at Rs.35 lacs in absence of any adverse material on record?”

Learned counsel for the revisionist submitted that a survey was conducted by SIB Unit on 21.06.2011. On the basis of the survey so made, assessing authority rejected the books of accounts of the assessee and made an addition of tax of Rs.10,34,000/-. Against the assessment order, a first appeal was preferred which was dismissed by the first appellate authority. The order of the first appellate authority was assailed before the Commercial Tax Tribunal, Varanasi Bench, Ist, Varanasi through Second Appeal No. 188 of 2015.

She has further contended that the Tribunal on the one hand accepted the fact that there was no major discrepancy from the loose papers found during survey with the books of accounts so submitted by the assessee during the assessment but only partly allowed the appeal and reduced the quantum of tax to Rs.2,82,125/-. According to her, once the Tribunal had recorded a finding that there was no discrepancy in the books of accounts, it was not justified in partly allowing the appeal and entire tax as imposed by the assessing authority should have been set aside.

Per contra, learned Standing Counsel submitted that finding of fact has been recorded by the Tribunal which warrants no interference by this Court as the quantum of tax which was assessed by the assessing authority has been reduced by the Tribunal after considering the material on record.

View of High Court:

It is not in dispute that the Tribunal has reduced the quantum of tax imposed by the assessing authority from Rs.10,34,000/- to Rs.2,82,125/-. From the perusal of the order passed by the Tribunal, it is apparent that finding recorded is contradictory. On the one hand, the Tribunal has accepted that there were minor discrepancies in the books of accounts submitted by the assessee from the survey report and on the other hand had accepted the partial finding recorded by the assessing authority. Once the Tribunal has recorded finding that there was a minor discrepancy in the stock which was there at the time of survey and it tallied with the books of accounts then there was no occasion to take a different view.

Considering the facts and circumstances of the case, as a contradictory finding has been recorded by the Tribunal, order dated 27.02.2016 passed by the Tribunal is hereby set aside and the matter is remitted back to the Tribunal for reconsidering and reconciling the facts of the case and pass a fresh order after affording opportunity of hearing to the concerned parties.

In view of said fact, the revision stands partly allowed.

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