STATE OF KERALA REPRESENTED BY DEPUTY COMMISSIONER(LAW) Vs. MALANADU CEMENTS & ALLIED PRODUCTS (P) LTD

JUDGEMENT

(1.) Revision Petitioner-State is aggrieved with the interference made by the Kerala Value Added Tax Additional Appellate Tribunal, Palakkad, to the estimation carried out by the Assessing Officer for probable omissions and suppression. We are of the opinion that the following question arises from the order of the Tribunal:-

(2.) We are surprised that after all these years such a question arises from the order of the Tribunal, and especially when estimation has been accepted to be for probable omissions and suppression, which is a consequence of the conduct of the assessee as revealed from an actual suppression detected. In the present case, the assessee, a cement dealer, filed 'nil returns' for 2005-06. Based on Check post declarations for 1556 MTs of cement in the months of April, May, October, November and December, 2005, totaling a turnover of Rs.59,12,800/-, proceedings were initiated for assessment after rejecting the books of accounts.

(3.) The proceedings culminated in Annexure-A order which added on a further quantity of 2178 MTs for the probable omissions and suppression. The Check post declarations detected were of the months of April, May, October, November and December, 2005, totaling 5 months. The estimation made was only less than two times of the turnover for the balance 7 months. The Assessing Officer divided the actual suppression detected by 5 being for five months and multiplied it with the remaining 7 months of the year and arrived at the figure of 2178 MTs., which was the addition made. The first appellate authority too confirmed the addition. The Tribunal while sustaining the taxable turnover with respect to the suppression detected and the value estimated, deleted the entire addition on the ground that the suppression detected and the estimation made was based on public records, while there was no detection of any other transaction effected by the assessee. The finding would be contrary to the principles of estimation on detection of suppression. The principles of best judgment enable the Assessing Officer to protect the interest of the Revenue and make reasonable estimation of turnover of an assessee, especially when an offence is detected of deliberate suppression; the test of reasonableness being the quantum of addition made having a nexus with the gravity of the offence. Though dependent upon the actual evidence collected, there can be no restriction insofar as the additions possible being only to the extent of the suppression detected; in which event the principles of best judgment would be rendered redundant. The Tribunal erred in so deleting the estimation on the aforesaid finding.