TARIQ BILAL V. COMMISSIONER COMMERCIAL TAX UTTARAKHAND

CTR/2/2012

AI Insights

Tariq Bilal, the owner of Roadways Canteen in Dehradun, challenged the assessment orders regarding his business's taxable turnover for the year 1999-2000. The Assessing Authority had conducted a best judgment assessment due to the absence of proper sale and purchase documents, resulting in a significantly higher taxable turnover compared to the previous year. Bilal's appeals at various levels were dismissed, leading to the filing of a revision in the High Court. The court found that the assessment for 1999-2000 was arbitrary and not based on reasonable estimates, as it did not consider the actual flow of passengers or potential sales, leading to the setting aside of the lower orders and remitting the case for re-assessment.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 690096 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 11-03-2022
• Assessment Year: misc
• Other Referred Cases: Kachwala Gems, Jaipur vs. Joint Commissioner of Income Tax, Jaipur, Shri S.M. Hasan, S.T.O. Jhansi & another vs. M/s New Gramphone House, Jhansi
• Laws Referred To: Kachwala Gems, Jaipur vs. Joint Commissioner of Income Tax, Jaipur, (2007) 12 SCC 761, Shri S.M. Hasan, S.T.O. Jhansi & another vs. M/s New Gramphone House, Jhansi, (1976) 4 SCC 854
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PUJA BANGA
• Assessee Lawyers: ARVIND VASHISTHA; IMRAN KHAN
• Keywords: Best Judgment Assessment; Commercial tax; Re-assessment; Taxable turnover
• Section: 141/20-2011; 580 of 2003

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Commercial Tax Revision No. 2 of 2012 Tariq Bilal ...….Revisionist -Versus- Commissioner, Commercial Tax Uttarakhand .......Respondent Present: Mr. Arvind Vashistha, the learned Senior Advocate assisted by Mr. Imran Ali Khan, the learned counsel for the revisionist. Ms. Puja Banga, the learned Brief Holder for the respondent. Date of hearing : 11.03.2022 Coram: Sri S.K. Mishra, ACJ. Sri R.C. Khulbe, J. Upon hearing the learned counsel for the parties, this Court made the following judgment: By virtue of filing of this revision, the revisionist, being the owner of Roadways Canteen at Gandhi Road, Dehradun, has assailed the order dated 09.11.2011, passed by the learned Commercial Tax Tribunal, Uttarakhand Division Bench, Dehradun in Second Appeal No. 141/20-2011 (1999-2000 Provincial) confirming the order passed by the Joint Commissioner (Appeal)-II Commercial Tax, Uttarakhand, Mukhyalaya, Dehradun in First Appeal No. 580 of 2003 (1999-2000 Provincial) whereby the first appeal has been dismissed confirming the assessment order dated 28.01.2002 passed by the Assessing Authority. 2. It is apparent from the records that the business premises of the revisionist was inspected by the Assessing Authority, and, as the revisionist could not produce any document regarding sale and purchase of Page No. 1 of 5 merchandise , food stock etc., he, by using his best judgment fixed turnover as follows:- 1. Sale of self cooked food, tea, breakfast Rs. 25,00000 5% 1,25,000/- 2. Taxable purchased food grains without forms Rs. 60,000/- 4% 24,000/- 3. Taxable purchases of Kirana, Besan, Refined-oil etc. from unregistered dealers. Rs. 1,00,000/- 5% 5,000/- 4. Purchases of Paneer from unregistered dealer Rs. 25,000/- 7.5% 1,875/- Taxable turnover of sales & purchases Rs. 32,25,000/- 1,55,875/- Therefore, he determined the taxable turnover of sales and purchases as Rs. 32,25000/- and the tax liability as Rs. 1,55,875/-. Though, it was not argued by the revisionist at any stage like the first appellate or second appellate stage that the best judgment of the Assessing Authority is based on whims and caprices. 3. We are inclined to entertain the argument advanced by Mr. Arvind Vashistha, learned Senior Advocate that the best judgment has to be on a reasonable basis and not on the basis of arbitrary use of discretion. 4. In this connection we take note of the judgment of the Hon’ble Supreme Court in Kachwala Gems, Jaipur vs. Joint Commissioner of Income Tax, Jaipur, (2007) 12 SCC 761, wherein the Hon’ble Supreme Court has held that it is well settled that in a best judgment assessment there is always a certain degree of guesswork. No doubt the authorities concerned, the Hon’ble Supreme Court further Page No. 2 of 5 held, should try to make an honest and fair estimate of the income even in a best judgment assessment, and should not act totally arbitrarily, but there is necessarily some amount of guesswork involved in a best judgment assessment, and it is the assessee himself who is to blame as he did not submit proper accounts. 5. In that reported judgment, the Hon’ble Supreme Court has held that there is no arbitrariness in that case on the part of the Income Tax Authority. 6. The Hon’ble Supreme Court in the case of Shri S.M. Hasan, S.T.O. Jhansi & another vs. M/s New Gramphone House, Jhansi, (1976) 4 SCC 854, has held that for a best judgment assessment, concerned authorities should not made it on speculative and fanciful grounds but on reasonable guess, since, the best judgment assessment does not negate the exercise of judgment on the part of officer. The Hon’ble Supreme Court further held that a tax officer, who makes a best judgment assessment should make an intelligent well grounded estimate rather than launch upon pure surmises. 7. Applying these ratios to the case in hand, the learned Senior Advocate appearing for the revisionist very eloquently placed that the same authority having assessment for the previous year i.e. 1998-1999 has assessed the liability as follows:- 1. Sale of self cooked food, tea, breakfast Rs. 4,00,000/- 5% 20,000/- 2. Taxable purchases Rs. 40,000/- 4% 1,600/- Page No. 3 of 5 food grains without forms 3. Taxable purchases of Kirana, Besan, Refined-oil etc. from unregistered dealers. Rs. 10,000/- 5% 500/- 4. Sale Milk & curd (Non- taxable) Rs. 50,000/- Exempt Gross sales Rs. 5,00,000/- Taxable Sales Rs. 4,50,000/- 22,100/- 8. Thus, from the record it is apparent that the Assessing Authority on the basis of best judgment has assessed the taxable sales of the said canteen i.e. Roadways Canteen at Gandhi Road, Dehradun owned and operated by present revisionist to be Rs. 4,50,000/- and the tax imposed is Rs. 22,100/- but it stands to no reason why on the next year i.e. 1999-2000, he came to the conclusion by using the concept of best judgment the taxable turnover of sales and purchase Rs. 32,25,000/-. 9. Mr. Arvind Vashishtha, the learned Senior Counsel is correct in his submission that the said assessment has been made on the basis of pure conjectures, as the Assessing Authority has not even taken into the total flow of the passengers to the particular terminal to assess what could have been the total sale of the canteen i.e. per day, per month and per year. 10. In that view of the matter, we are of the opinion that the best assessment concept as applied to the assessment year 1999-2000 is incorrect. 11. In that view of the matter, we are of the opinion that the revision is meritorious one, and the same is Page No. 4 of 5 allowed. The order dated 09.11.2011 passed by the learned Commercial Tax Tribunal Uttarakhand Division Bench, Dehradun, order dated 21.01.2011 passed by the Joint Commissioner (Appeal)- II Commercial Tax, Uttarakhand, Mukhyalaya, Dehradun and order dated 28.01.2002 passed by the Assessing Authority are hereby set-aside. The matter is remitted back to the Assessing Authority for re-assessment in the line of the observations made by us in the preceding paragraphs. (Ramesh Chandra Khulbe, J.) (Sanjaya Kumar Mishra, ACJ.) PV Page No. 5 of 5 "