M/S KAMLA TRADING COMPANY V. COMMERCIAL TAX TRIBUNAL BENCH-I AND 2 OTHERS

WTAX/578/2018

AI Insights

The case involves M/S Kamla Trading Company, the petitioner, challenging an order from the Commercial Tax Tribunal which mandated a 10% deposit of a disputed tax amount following a best judgment assessment for the assessment year 2016-17. The assessment, based on a survey and subsequent findings, led to a demand of Rs.3,03,59,207 for alleged evaded purchases of Pan Masala and tobacco. The petitioner contested the assessment and the interim orders through various appeals, arguing financial incapacity to deposit the required amount. However, the court found the petitioner's financial claims inconsistent with their own records and upheld the Tribunal's decision.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 691619 (HC-AGRA)
• Appeal Type: Others
• Pronouncement Date: 04-04-2018
• Assessment Year: misc
• Other Referred Cases: L.Hirday Narain Vs. Income-Tax Officer, Bareilly AIR 1971 SC 33, Shivangi Steels (P.) Ltd. Vs. Assistant Commissioner of Income-Tax and another 2004(266) ITR 62
• Laws Referred To: U.P. VAT Act, Section 28(2)(ii) of the Act
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: C S C; A C TRIPATHI
• Assessee Lawyers: GOVIND KRISHNA; AKHILESH KUMAR
• Keywords: Best Judgment Assessment; Disputed tax; Financial hardship; Stay of recovery
• Section: 57; 28(2)(ii)

Judgement Text

"Court No. - 7 Case :- WRIT TAX No. - 578 of 2018 Petitioner :- M/S Kamla Trading Company Respondent :- Commercial Tax Tribunal Bench-I And 2 Others Counsel for Petitioner :- Govind Krishna,Dr. Akhilesh Kumar Counsel for Respondent :- C.S.C. Hon'ble Surya Prakash Kesarwani,J. Heard Sri Govind Krishna, learned counsel for the petitioner and Sri A.C. T ripathi, learned standing counsel for the respondents. This writ petition has been filed praying for the following relief: i) issue a writ, order or direction in the nature of certiorari to quash the order dated 09.02.2018 passed by Tribunal Bench No.1 Agra, in Second Appeal No.75/2018 (2016-17) under Section 28(2)(ii) of the Act to the extent directs to deposit 10% of disputed amount of tax. ii)Issue a writ, order or direction in the nature of mandamus directing for issuance of necessary direction to the first Appellate authority respondent No.2 to decide the First Appeal forthwith and Respondent No.3 be directed not to initiate proceedings for the realization thereto in pursuant thereof. The best judgment assessment for the A.Y . 2016-17, under Section 28(2) (ii), dated 20.1.2018, was passed by the Assessing Authority in respect of the assessee invoking the provisions of best judgment assessment and thereby creating a demand of Rs.3,03,59,207/-. The assessee deals in Pan Masala and tobacco. On the basis of incriminating materials found in survey dated 22.2.2017 and other materials on record, the evaded purchases of Pan Masala, tobacco and packing materials etc. amounting to Rs.7,65,65,108/- were determined and the tax thereon was assessed at Rs.30,359207/-. Aggrieved with this Assessment Order, the petitioner-assessee filed an appeal before the Additional Commissioner Grade -2 (Appeals) - 2nd Commercial T ax Agra alongwith a stay application in which the appellate authority passed an interim order staying 70% of the recovery subject to certain conditions. Aggrieved with the aforesaid interim order the petitioner filed a second appeal No.75 F/2018 (2016-17) under Section 57 of the U.P . VAT Act alongwith a stay application. The stay application of the petitioner was partly allowed by the impugned order dated 9.2.2018 whereby the stay of recovery was granted upto 90% of the disputed tax. Aggrieved with this order the present writ petition has been filed. Learned counsel for the petitioner submits that the effect of the impugned order is that 10% of the disputed tax amounting to Rs.30,35,920/- is a very huge amount which the assessee is not in position to deposit. The assessment was arbitrarily made and, therefore, the entire disputed amount should have been stayed by the Tribunal. In paragraph 10 of the writ petition it has been stated that petitioner is not having sound financial position. In support of his submissions, he relied upon a judgment of Hon'ble Supreme Court in the case of L.Hirday Narain Vs. Income-Tax Officer , Bareilly AIR 1971 SC 33 and a judgment of this Court in Shivangi Steels (P .) Ltd. Vs. Assistant Commissioner of Income-Tax and another 2004(266) ITR 62. I have carefully considered the submissions of learned counsel for the petitioner and I find no substance in it. The Assessing authority issued a show cause notice followed by a supplementary show cause notice making several allegations. The books of account as produced by the assessee during the course of assessment proceedings, revealed that as on the date of survey the opening cash balance as per the books of accounts was 32,39,285/- while the closing balance was 29,09,285/-. It was further found that in the balance sheet Rs.1,15,52,138/- has been shown as cash in hand. The provisions of best judgment assessment was invoked by the assessing authority and the assessment order was passed creating a demand of Rs.3,03,59,207/-. The submission of learned counsel for the petitioner that financial position of the petitioner is not sound and he has no money to deposit can not be accepted in view of his own documents i.e. the cash book and the balance sheet as mentioned above. This Court is not entering into the merits of the finding recorded by assessing authority inasmuch as the matter is pending adjudication in first appeal. But prima facie it can not be said that the Assessment Order is totally groundless. No evidence has been filed by the petitioner either before the first appellate authority or the T ribunal and even before this Court to establish extreme financial hardship. Under the circumstances, the first appellate authority and the T ribunal have taken a very lenient view to stay the recovery to the tune of 90% of the disputed tax. Therefore, there is no valid reason to interfere with the impugned order of the T ribunal. In view of the aforesaid, I do not find any merit in this writ petition. Consequently, the writ petition fails and is hereby dismissed. It is clarified that first appellate authority while deciding the appeal, shall not be influenced by any of the observations made in the body of this order. Order Date :- 4.4.2018/vkg "