IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 14TH JULY 2008 / 23RD ASHADHA 1930 ST.Rev..No. 127 of 2006 ---------------------------------------- (ORDER DATED 31-8-2005 IN TA.No.152/2002 OF KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE) .................... REVISION PETITIONER:APPELLANT: --------------------------------------------------- M/S. CITIZEN TRADERS, BIG BAZAAR, KOZHIKODE, REPRESENTED BY K.P. MUHAMMED HARRIS MANGING PARTNER. BY ADV. SRI.ARIKKAT VIJAYAN MENON SMT.MEERA V.MENON SRI.HARISANKAR V.MENON. RESPONDENT:RESPONDENT: ------------------------------------------ STATE OF KERALA. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 14/07/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------------------ S.T.Rev.No.127 of 2006 --------------------------------------------- Dated, this the 14th day of July, 2008 O R D E R H.L.Dattu, C.J. A dealer registered both under the provisions of the Kerala General Sales Tax Act and Central Sales Tax Act (“KGST Act & CST Act” for short), has filed this tax revision case under Section 41 of the KGST Act and in that has framed the following questions of law for our consideration and decision. They are as under: A. Whether on the facts and in the circumstances of the case, has not the Appellate Tribunal gone wrong in sustaining the addition to the turnover on the basis of the transactions through the State Bank of Travancore, when the petitioner had specifically pointed out that those figures represented transaction effected in the neighboring State? B. Whether on the facts and in the circumstances of the case has not the Appellate Tribunal gone wrong in sustaining an assessment on the basis of the transaction through the bank, when there is no evidence to prove that they were related to unaccounted purchases and sales? 2. The assessee had filed its returns for the assessment year 1996-97 disclosing a total and taxable turnover of Rs.2,84,18,556.30 and S.T.Rev.No. 127 of 2006 -2- Rs.1,03,38,704/- respectively. 3. At the time of completion of the assessment proceedings the assessee had produced the books of accounts. 4. The assessing authority had received some information from the Investigation Branch of the department and in view of that information, the assessing authority, after rejecting the books of accounts and returns filed by the assessee had issued a pre-assessment notice. In that, apart from others, had indicated to the petitioner that a sum of Rs.87,91,368/- which is reflected in the Bank account has not passed through the books of accounts of the dealer. In order to answer the contentions canvassed by the learned counsel for the assessee, it is relevant to notice what was pointed out by the assessing authority in the pre-assessment notice. The same is as under: “It has come to the notice of the Investigation branch of this Dept., that the dealer has operated a current account (Account No.CA 100020) in the SBT, Mavoor Road, branch Kozhikode with effect from 21-5-96. The total amount deposited in the above account during the period from 21-5-96 to 31-3-97 comes to Rs.87,91,368/- and the withdrawals comes to Rs.87,40,439/- . None of the transactions passed through this bank account are S.T.Rev.No. 127 of 2006 -3- seen accounted by the dealer in their regular books of accounts. There are frequent deposits and withdrawals of huge amounts. Almost all the withdrawals are made for taking DDs for sending outside the State consignors. The underclosed bank account represents the transactions in connection with the unaccounted receipt and sales of edible oil. The unaccounted sales turnover under this item will be estimated at 110% of the amount withdrawn from the above current account which represents the purchase value of goods. The sales turnover thus estimated Rs.96,14,483/- will therefore be added to the total turnover conceded.” 5. After receipt of the pre-assessment notice, the assessee had filed its reply and in that in so far as the first omission pointed out by the assessing authority, the assessee had stated that the amounts shown in the statement of account of the Bank in fact has passed through its accounts. The reply in this regard is as under: “The allegation that transactions revealed in the account kept with SBT, Mavoor have not passed through the accounts is unfounded, and the statement is made without verifying the account of the dealer and without any substantial evidences. According to the dealer, the entire transactions S.T.Rev.No. 127 of 2006 -4- are passed through the accounts.” 6. The assessing authority after considering the reply so filed by the assessee and the first omission pointed out by him in his assessment order has stated as under: “.....This proved that the transactions, though admitted, have not passed through the accounts of the dealer. The addition of sales turnover under this item is confirmed.” 7. After observing as aforesaid, the assessing authority has quantified the tax liability by passing the best of his judgment by adding a particular percentage to the declared total and taxable turnover. 8. Aggrieved by the quantification so made by the assessing authority, the assessee was before the first appellate authority in S.T.A.No.48 of 2001, and in that had taken a different stand altogether on the first omission pointed out by the assessing authority. The first appellate authority while considering that issue, has stated that the issue now raised was not pleaded before the assessing authority, and has been raised for the first time before him and further while replying to the pre-assessment notice, the assessee had in fact admitted the omission. It is also stated that the deposits in the bank represented the sale proceeds of refined oil affected at Karnataka and the withdrawals from bank S.T.Rev.No. 127 of 2006 -5- represented the actual payment of the price of such goods which are sold outside the state. But, on this point, when the appellant was asked to offer their explanation by the intelligence wing of the Department and the assessing authority, the appellant had not offered any explanation. As the appellant was silent on this issue at the appropriate time, the present explanation is not valid. The sales turnover estimated on this goods will have to be retained. In view of this, the rejection of accounts also have to be upheld. 9. Aggrieved by the aforesaid reasoning of the first appellate authority, the assessee was before the Tribunal in T.A.No.152 of 2002. In our opinion, the Tribunal has rightly rejected the appeal filed by the assessee by its order dated 31st August, 2005. 10. Aggrieved by the order so passed by the assessing authority, the first appellate authority and the appellate Tribunal, the assessee is before us in this tax revision case. 11. Sri.Harisankar V.Menon, learned counsel appearing for the revision petitioner would vehemently contend before the Court that, there was no valid reason for the assessing authority to reject the books of accounts and returns in so far as the first omission pointed out by him in the pre-assessment notice. A perusal of the pre-assessment S.T.Rev.No. 127 of 2006 -6- notice would clearly indicate, that, the assessee had not accounted some of the transactions reflected in the accounts of the Bank in its books of accounts. This has come to the notice of the assessing authority through the Investigation Branch of the department. The assessee in the reply filed to the notice stated that the omission pointed out by the assessing authority is not well-founded and in fact the aforesaid transaction has been reflected in the books of accounts. 12. Before the first appellate authority, the assessee had taken altogether a different contention. Keeping these aspects in view, the first appellate authority in our opinion had rightly rejected the submission made by the assessee before him. 13. In our view, having said in the reply notice that the omissions pointed out by the assessing authority is reflected in the books of account, it was the obligation of the assessee to have discharged that burden. Since the assessee did not discharge that burden, the assessing authority, keeping in view, the information received from the Investigation Branch of the department has rightly made an addition of that amount to the conceded turnover of the dealer. These aspects which are decided by the assessing authority is totally based on the pre-assessment notice and the reply filed by the assessee. Therefore, in S.T.Rev.No. 127 of 2006 -7- our opinion, no question would arise in this revision petition for our consideration and decision. Therefore, the Sales Tax Revision requires to be rejected and it is rejected. 14. Consequently, I.A.No.1426 of 2006 is rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS/dk