STATE OF TAMIL NADU Vs. V BALU CHETTIAR

JUDGEMENT

(1.) IN both these revisions, the State is the petitioner. The assessee is V. Balu Chettiar, who is a dealer in oil and oil cakes at Thanjavur. The assessing officer while checking the accounts, has found that the gross profit disclosed was low. There was no separate account maintained for first sale of oil. The assessee had purchased oil cake from one Rajamani Trading Corporation, Trichy, to the extent of Rs. 1, 57, 835. The investigation revealed that there were no such dealers at Trichy and hence the assessing officer disallowed exemption for groundnut oil for Rs. 17, 940 and Rs. 1, 77, 564 for groundnut oil cake. The inspection in the shop on August 18, 1979, revealed stock discrepancies. The inspection of the shop on August 15, 1979 and October 16, 1979, revealed sales without issue of bills. The purchase bills of 9, 640 tins of vanaspati and 368 bags of cotton seeds revealed that out of the 150 tins remaining, the value was ascertained and assessed above the total taxable turnover at Rs. 22, 86, 221 and Rs. 5, 72, 966 respectively. Penalty of Rs. 10, 398 also was levied for the suppression.

(2.) AGAINST the addition of Rs. 2, 87, 364 and levy of penalty of Rs. 10, 398, the assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that the transactions with Rajamani Trading Corporation by the assessee cannot be termed as fictitious as the department has not proved that Rajamani Trading Corporation were bill traders. Hence the Appellate Assistant Commissioner granted relief of Rs. 18, 837 under groundnut oil and Rs. 1, 86, 442 under groundnut oil cake. Since the transactions were treated as genuine, the Appellate Assistant Commissioner deleted the entire penalty.

(3.) THE Tribunal held that the assessee had not charged separately for the sale of packing materials, that there is no contract for sale of packing materials, either implied or explicit, and that the sale of oil, vanaspathi and cotton seeds were second sales and not liable to tax in the assessee's hands and as such set aside the addition of Rs. 48, 554. Regarding the addition made for the defects, the Tribunal upheld the defects and additions for the defects. Regarding the enhancement petition for the restoration of penalty and the turnover relating to transactions with Rajamani Trading Corporation the Tribunal held that the Revenue had not proved that Rajamani Trading Corporation were bill traders, that they were available at Virudhunagar and that the assessee had proved that there was an earlier taxable sale and that as per the judgment of the Madras High Court in Deputy Commissioner (CT) v. Sivakumar and Company the assessee had done whatever he could and as such the Appellate Assistant Commissioner was right in deleting the turnover of groundnut oil for Rs. 17, 940 and oil cake for Rs. 1, 77, 564. Regarding the penalty, the Tribunal relying upon the decision in State of Tamil Nadu v. Jakthi Veliyeetakam held that when the penalty was set aside by the Appellate Assistant Commissioner, there was no question of restoration. Thus, the enhancement petition was dismissed.