IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN TUESDAY, THE 3RD MARCH 2009 / 12TH PHALGUNA 1930 ST.Rev..No. 149 of 2008() ------------------------- (T.A. NO.136/2007 OF KERALA SALES TAX APPELLATE TRIBUNAL, ADDL. BENCH, PALAKKAD.) REVISION PETITIONER/APPELLANT/REVENUE ---------------------------------------------------------- STATE OF KERALA REP. BY JOINT COMMISSIONER(LAW) IN-CHARGE, COMMERCIAL TAXES, ERNAKULAM. BY SPL. G.P. SRI.VINOD CHANDRAN RESPONDENT(S): APPELLANT/ASSESSEE --------------------------------- SMT.SEENA SUNNY, PROPRIETOR, SUNNY DIAMOND, CONVENT ROAD, CHALAKUDY. ADV. DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 03/03/2009, THE COURT ON 03/03/2009 PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... S.T. Rev. No.149 of 2008 .................................................................... Dated this the 3rd day of March, 2009. ORDER Ramachandran Nair, J. Heard Special Government Pleader appearing for the petitioner and Senior counsel appearing for the respondent-assessee. The order under challenge is the one issued by the Sales Tax Appellate Tribunal upholding the order of the first appellate authority wherein he has sustained addition of Rs.5 lakhs in addition to actual suppression found during inspection. The specific case of the Revenue is that the Inspection Team was denied entry into the house of the respondent for two hours for destruction of records and only under threat of breaking open the house, the house was opened and inspection permitted. In the course of two hours, much of the documents pertaining to clandestine business have been destroyed is the case of the petitioner. However, counsel for the respondent-assessee contended that all the documents were seized and actual suppression upto date of seizure was available on record. According to him, when this amount is added, estimation is 2 justified only for the balance two days of the financial year. 2. We are unable to uphold the order of the Tribunal confirming the first appellate authority's order because by these orders, the two appellate authorities have virtually directed acceptance of books of accounts pertaining to clandestine business of the assessee carried on in the house. There is no presumption in law that books of accounts pertaining to clandestine business carried on by the assessee are full and complete. However, it is for the assessee to establish that the records retained are full and complete and the turnover has to be based on the figures available from such records. The Special Government Pleader pointed out that one floppy seized by the department contains sales pertaining to one single buyer and documents pertaining to sales to others are not recovered at all. Counsel appearing for the respondent submitted that besides the general statement that records seized are not full and complete, the Assessing Officer also has not examined the seized records to justify addition over and above actual suppression noticed. He also submitted that three times addition is exorbitant. We feel the Assessing Officer also has not properly evaluated the records 3 seized during search in as much as he has not found out anything missing from such records which alone will justify addition. Even if accounts are found to be in complete, addition has to be only reasonable and should be only for the period of omission in the accounts. In any case orders of the first appellate authority and the Tribunal are not tenable because by their orders they have virtually accepted books of accounts upto date of seizure, even after assessee accepted non-maintenance of books of accounts and paid maximum compounding fee of Rs.2 lakhs to avoid prosecution and penalty. We, therefore, set aside the orders of the Tribunal and that of the first appellate authority and remand the matter to the Assessing Officer for him to call for the records from the Intelligence Officer, evaluate the same in the presence of the assessee and issue fresh proposal for assessment and complete the assessment afresh after giving adequate opportunity to the respondent-assesee. If any records are maintained by the assessee, the same will be produced by the assessee before the Assessing Officer. If the seized records are released to the respondent, respondent-assessee will produce the same before the Assessing 4 Officer, failing which the assessment will be completed based on available records. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms