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2014 DIGILAW 49 (JK)

Ram Lal Gupta & Co. Warehouse v. Dy. Commissioner, CT (A), Jammu

2014-02-12

Kossar Ahmad Qureshi

body2014
ORDER 1. This appeal is directed against the order dated 16-11-2009 passed by the Ld Deputy Commissioner, Commercial Taxes (Appeals) (Appellate Authority) Jammu whereby the said Appellate Authority has upheld the order passed by the Assessing Authority under section 7(15) of the J&K GST Act, 1962. 2. The brief facts of the case are that the appellant is a registered dealer with Commercial Tax Department Circle-D, Jammu. The appellant was assessed for the assessment year under consideration and the returned filed by the appellant was accepted. Later the Assessing Authority reopened the assessment under section 7(11) of the Act, on the alleged ground that the appellant has effected purchases from outside the state but not shown in the books of accounts. On the basis of said bills an assessment order was passed against the appellant. The appellant filed an appeal before the Appellate Authority and the Appellate Authority set aside the case to the Assessing Authority on the ground that there has been violation of principles of natural justice as the bills in question have not been shown to the appellant. 3. When the Assessing Authority re-started the proceedings, he issued notice to the appellant that the appellant has effected purchase against 7 bills, which have not been recorded in the books of accounts. The appellant has filed the detailed reply denied 6 bills out of the seven and filed affidavit to this effect before Assessing Authority. The Assessing Authority again issued notice to appellant and appellant again vide affidavit dated 28-03-2009 denied the purchase effected from M/s Gurdev Hardware Store, Jalandhar, M/s Raj Kumar Amar Pal, Delhi and M/s Sumit Sales Crop; Jalandhar and in the affidavit clearly stated that the appellant has not transacted any business with said firms in previous years or in the year 1995-96. 4. The Assessing Authority held that denial of bills is not acceptable as the same pertains to appellant and raised assessment vide his order dated 31-03-2009. The Assessing Authority further charged interest under section 8(8) and imposed penalty u/s 17(1)(f) of J&K GST Act. 5. Aggrieved by the order passed by the Assessing Authority filed appeal before Appellate Authority challenging the imposition of tax, interest and penalty who has rejected the appeal by holding that mere denial by the appellant is not sufficient. The Assessing Authority further charged interest under section 8(8) and imposed penalty u/s 17(1)(f) of J&K GST Act. 5. Aggrieved by the order passed by the Assessing Authority filed appeal before Appellate Authority challenging the imposition of tax, interest and penalty who has rejected the appeal by holding that mere denial by the appellant is not sufficient. It is rather evidence against the appellant which the appellant has failed to rebut and in absence of any concrete evidence supporting denial of bills the Assessing Authority has rightly proceeded against the appellant. 6. Again aggrieved the appellant has challenged both the orders in this appeal stressing only two grounds besides other grounds taken in the memorandum of appeal. 1. Whether an assesse/ appellant can be asked to prove a "negative", as the assesse/ appellant can prove it positive? 2. The onus to prove that the assesse/ appellant has effected a purchase is upon the respondent/ deptt. more so when an affidavit denying the purchases has been filed before the respondent No. 2 Assessing Authority and he has not cross-examined the assesse/ appellant, under the circumstances in Judgment of Hon'ble Supreme Court in Metha Park Case is directly applicable. 7. Heard the counsel for the parties at length. Perused the record and given thoughtful consideration into the matter. 8. The Ld. Counsel for respondents Mr. Amit Gupta has pleaded that the orders passed by the Assessing Authority and Appellate Authority are legal and passed in consonance with law which do not call any interference. 9. The Appellate Authority has fallen in error, in holding that in view of the facts that appellant has failed to rebut the evidence against him and in view of any concrete evidence supporting the denial, the Assessing Authority has passed the aforesaid order without appreciating that appellant has filed an affidavit clearly stating that the bills in question does not belong to the appellant and the appellant has not made any transaction with above referred firms, neither cross examined the appellant, nor produced any other concrete evidence to show that the appellant has effected the purchases in question. 10. It is well settled law that affidavit is general evidence of the facts till otherwise proved. If a person filed affidavit and is not cross-examined, it is not open to a revenue to challenge the correctness of the statement made in affidavit. 11. 10. It is well settled law that affidavit is general evidence of the facts till otherwise proved. If a person filed affidavit and is not cross-examined, it is not open to a revenue to challenge the correctness of the statement made in affidavit. 11. The law on the subject is judgment of Hon'ble Supreme Court comprising three Judge Bench case titled Beharilal Ramcharan v. Income Tax Officer and another reported in (1981) 24 CTR (SC) 116: (1981) 131 ITR 129 (SC) : (1981) 6 TAXMAN 69 whereby Hon'ble Supreme Court has held in Para 3 page 3 which reads as under:- "Under clause (vi) of s 226(3) The discovery by the ITO that the statement on oath made on behalf of the garnishee is false in any material particular has the consequence of imposing a personal liability for payment on the garnishee and it must, therefore,, be a quasi-judicial decision preceded by a quasi-judicial inquiry involving observance of the principles of natural justice. The ITO cannot subjectively reach the conclusion that in his opinion the statement on oath made on behalf of the garnishee is false in any material particular. He would have to give notice and hold an inquiry for the purpose of determining whether the statement on oath made on behalf of the garnishee is false and in which material particular and what amount is in fact due from the garnishee to the assesse and in this inquiry he would have to follow the principles of natural justice and reach on objective decision. Once a statement on oath is made on behalf of the garnishee that the sum demanded or any part thereof is not due from the garnishee to the assesse, the burden of showing that the statement on oath is false in any material particular would be on the Revenue and the Revenue would be bound to disclose to the garnishee all such evidence or material on which it proposes to rely and it would have to be shown by the Revenue on the basis of relevant evidence or material that the statement on oath is false in any material particular and that a certain definite amount is due from the garnishee to the assesse. Then only can personal liability for payment be imposed on the garnishee under clause (vi). Then only can personal liability for payment be imposed on the garnishee under clause (vi). It will be seen that after receipt of the affidavit of the accountant, the ITO did not give any notice or hold any inquiry for the purpose of determining whether or not the statement on oath made by the accountant in the affidavit was false in any material particular and whether any and, if so, what amount was due from the petitioners to B but straightaway reached the conclusion that the statement on oath that nothing was due from the petitioners to B was false in material particulars and, without even determining what precise amount was due from the petitioners to B held that the petitioners were personally liable to the ITO under clause (VI). The ITO did set out in his notice dated 31st December, 1966 the reasons which prevailed with him in reaching this decision but he did not offer any opportunity to the petitioners to show that the reasons which weighed with him were not correct. The decision reached by the ITO that the statement on oath made in the affidavit of the accountant was false in material particulars as set out in the notices dated 31st December, 1966, and 11th January, 1967, was, therefore, clearly invalid and the notices dated 31st December, 1966 and 11th Jan, 1967, must consequently be set aside. Behari lal Ram Charon Kothi v. ITO (1972) 84 ITR 113 (All): TC52R.1138 set aside on this point". 12. The Ld. Assessing Authority without any enquiry and without giving any reason has thrust responsibility to the shoulders of appellant when appellant has categorally denied the bills and has sworn affidavit to this effect. Failure to record reasons is always fatal. I say so it is reason alone which will disclose application of mind to the facts in issue. Such application of mind would be discernible from reasons. Reasons are the link between the order and the mind of its maker. Recording of reasons prevents miscarriage of Justice and ensures fair play in action. Since both the Authorities below have passed orders impugned without recording any reasons in its support, the orders cannot be held to a speaking one. The orders passed by the Authorities below therefore are liable to be set aside. 13. Recording of reasons prevents miscarriage of Justice and ensures fair play in action. Since both the Authorities below have passed orders impugned without recording any reasons in its support, the orders cannot be held to a speaking one. The orders passed by the Authorities below therefore are liable to be set aside. 13. The Appellate Authority has also failed to appreciate that the appellant cannot prove a negative against itself. The onus of proving that the bills in question belongs to appellant was upon the Assessing authority, which onus has not been discharged by any concrete evidence, such as release of goods in question by the appellant from the transport company. Clearance of the goods by the appellant from the Lakhanpur Authorities and Sending of "C" Forms by the appellant to the alleged sellers. The mere mention of CST No. of the appellant is not sufficient to hold that appellant has affected the purchases in question. 14. The Appellate Authority has also not given any finding regarding imposition of penalty but rejecting the appeal regarding the same by a non speaking order and caused miscarriage of Justice while not returning the finding. 15. For the foregoing reasons, I would hold that no proper enquiry was conducted by the Ld. Assessing Authority tax was levied and interest and penalty was imposed. Thus the principles of natural justice have been violated. The fundamental principle of law which pervades the entire Judicial spectrum is justice and fairplay. The orders passed by the Authorities below are not speaking orders and does not disclose any application of mind. Thus the impugned orders are bad and improper and are required to be set aside. 16. Accordingly the appeal is allowed and order passed by the Ld. Appellate Authority is set aside and order passed by the Assessing Authority is quashed. The appeal is disposed of and shall be consigned to records. The record called for be sent back forthwith and Stay, if any, granted earlier is hereby vacated.