KONATHAM BHASKAR RAO Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) Learned counsel the assessee, Sri S. Dasaratharama Reddi, has made certain far-reaching propositions in this case and they require to be examined carefully. According to him, an assessee, who declared turnovers in the monthly returns, which were admittedly far less than the turnover recorded in the books of account maintained by him, cannot be penalised under section 14(2) of the Andhra Pradesh General Sales Tax Act (the "Act" for short) for concealing the real turnover in the monthly returns filed by him if eventually the final assessment is made on the turnover as recorded in his books of account.

(2.) In connection with the financial year 1973-74, the assessee filed monthly returns under rule 13 read with rule 17(2) of the Andhra Pradesh General Sales Tax Rules, 1957 (the "Rules" for short). Rule 17(2) requires a dealer to submit every month a return in form A-II showing the total and net turnover relating to each month. Such return has to be filed before the 25th of the succeeding month to which the return relates. The assessee in this case filed such returns for the months of April and May, 1973. In the return for the month of April, 1973, the turnover declared was Rs. 12,794. In the return for the month of May, 1973, the turnover declared was Rs. 10,000. The returns for may, 1973, was submitted sometime during the month of June, 1973. There was an inspection of the business premises of the assessee on 15/07/1983, during the course of which certain account books were found. According to these books of account, the turnover for the month of April, 1973, was Rs. 1,68,595 and the turnover for the month of May, 1973, was Rs. 2,19,835. As soon as the above books were detected and the real turnover for the months of April and May, 1973, were noticed by the authorities during the course of the inspection, the assessee promptly filed revised returns for the two months admitting the turnover according to the books of account noticed during the course of the inspection. The Commercial Tax Officer made a provisional assessment on 1/08/1973, on the turnovers recorded in the books of account for the months of April and May, 1973, and declared by the assessee in the revised monthly returns filed. The Commercial Tax Officer came to the conclusion that in the monthly returns filed, the assessee concealed turnover of Rs. 3,65,636 which is the resultant difference between aggregate of the turnover for the months of April and May, 1973, as peper books of account, and the aggregate of the turnover according to the monthly returns originally filed. (Rs. 3,88,430 less Rs. 22,794). The Commercial Tax Officer levied penalty of Rs. 41,236 which was equal to five times of the tax due on the real turnover. The assessee filed an appeal against the penalty levied on the ground that there is no power conferred on the Commercial Tax Officer to levy penalty on the basis of the provisional assessment. It was pointed out that power is conferred on the Commercial Tax Officer to levy penalty under section 14(2) only on the completion of final assessment under section 14(1) of the Act. It was, therefore, urged that the order of the Commercial Tax Officer levying penalty was illegal. The assessees contention was upheld in appeal and the order levying penalty was set aside as there was no sanction under law to levy penalty pursuant to a provisional assessment. In course of time, the final assessment was made for the financial year 1973-74 and the turnover for the entire year was determined at Rs. 16,53,195. In determining the turnover as mentioned above, the Commercial Tax Officer adopted the turnover as recorded in the books of account for the months of April and May, 1973, rejecting the turnovers declared in the monthly returns originally filed. The Commercial Tax Officer initiated penalty proceedings under section 14(2) of the Act in the view that the assessee had concealed turnover in the returns for the months of April and May, 1973, originally filed. Obviously, the Commercial Tax Officer ignored the revised returns filed by the assessee admitting the correct turnover for these two months as recorded in the books of account. As far as the assessment is concerned, it became final, there being no appeal. Pursuant to the penalty notice issued, the Commercial Tax Officer levied penalty of Rs. 39,050 which is equivalent to five times the tax due on the suppressed turnover of Rs. 3,65,636 in the returns originally filed for the months of April and May, 1973. The assessee filed an appeal before the Assistant Commissioner of Commercial Taxes challenging the validity of the order passed by the Commercial Tax Officer levying penalty. The assistant Commissioner upheld the validity of the order levying penalty but reduced the quantum to Rs. 7,180 thereby giving relief of Rs. 31,870. The Assistant Commissioner reduced the penalty "taking lenient and liberal view in the context of their assessees financial position".

(3.) The assessee carried the matter in second appeal to the Sales Tax Appellate Tribunal. The Tribunal rejected the assessees contention that, in the facts and circumstances of the case, no penalty can be levied at all. The Tribunal held that penal provisions were clearly attracted. The Tribunal further held that the quantum of penalty sustained by the Assistant Commissioner was reasonable and no further interference was called for in the matter of reducing the penalty. Aggrieved by the order of the Tribunal sustaining the penalty of Rs. 7,180 levied, the assessee filed the present tax revision case.