# M/S B.S. Enterprises, Agra v. The Commissioner of Commercial Tax, U.P. Lucknow Opp. Party

- **Citation:** (2021) 1 ILRA 677
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2020-12-02
- **Case number:** Commercial Tax Revision No. 94 of 2020
- **Bench:** Pankaj Bhatia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-b-s-enterprises-agra-v-the-commissioner-of-commercial-tax-u-p-lucknow-opp-46115
- **Pages:** 6

## Headnote

C.S.C.

(A) Tax - Best Judgment Assessment - The
Assessing Authority, solely on the basis of one
fake tax invoice amounting to Rs. 11,970,
assessed evaded sales at Rs. 26,15,000/- which
is 100% of the disclosed sales. Apart from only
one bill the Assessing Authority had nothing
more to form an opinion that the sales equal to
the declared sales should be determined as
evaded sales. Therefore, this Court found it
justifiable to hold evaded sales to be 10% of the
total disclosed sales for the purpose of
determining the tax liability. (Para 19, 20)

Revision Partly Allowed. (E-8)

List of Cases cited :-

## Text

1 All. M/S B.S. Enterprises, Agra Vs. The Commissioner of Commercial Tax, U.P. Lucknow
677
(2021)01ILR A677
REVISIONAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 02.12.2020

BEFORE

THE HON'BLE PANKAJ BHATIA, J.

Commercial Tax Revision No. 94 of 2020

M/S B.S. Enterprises, Agra ...Applicant
Versus
The Commissioner of Commercial Tax,
U.P. Lucknow ...Opp. Party

Counsel for the Applicant:
Sri Vishwjit

Counsel for the Opp. Party:
C.S.C.

(A) Tax - Best Judgment Assessment - The
Assessing Authority, solely on the basis of one
fake tax invoice amounting to Rs. 11,970,
assessed evaded sales at Rs. 26,15,000/- which
is 100% of the disclosed sales. Apart from only
one bill the Assessing Authority had nothing
more to form an opinion that the sales equal to
the declared sales should be determined as
evaded sales. Therefore, this Court found it
justifiable to hold evaded sales to be 10% of the
total disclosed sales for the purpose of
determining the tax liability. (Para 19, 20)

Revision Partly Allowed. (E-8)

List of Cases cited :-

1. M/s Kapil Kumar & Brothers, Gautam Budh
Nagar Vs Commissioner of Trade Tax Vol. 34
NTN 2007, Page 171 (followed)

2. Ayyub Traders Vs Commissioner, Commercial
Tax U.P., Lucknow 2019 U.P.T.C. (Vol. 102) -
1363

3. M/s Vivek Agency thru' Prop. Gyan Prakash
Kesarwani Vs The Commissioner of Tarde Tax,
U.P. Lucknow Sales/Trade Tax Revision No. 317
of 2007
4. M/s Raj Pan Products Pvt. Ltd. Vs
Commissioner of Commercial Tax, U.P. Lucknow

5. St. of Kerala Vs C. Velukutty (1966) 60 ITR
239

6. The Commissioner of Income Tax, Calcutta
Vs Padamchand Ramgopal (1970) 3 SCC 866

7. Ms Joharmal Murlidhar & Co. Vs Agricultural
Income Tax Officer, Assam & ors. (1970) 3 SCC
331

8. Shri S.M. Hasan, S.T.O. Jhansi & anr Vs M/s
New Gramophone House, Jhansi (1976) 4 SCC
854

(Delivered by Hon'ble Pankaj Bhatia, J.)

1. Heard Sri Vishwjit, learned counsel
for the revisionist and Sri Rishu Kumar,
Standing Counsel appearing on behalf of
State-opposite party.

2. In view of the statement made by
the Standing Counsel that he does not want
to file any objections, I proceed to hear and
decide the matter finally.

3.

The
present
assessment
proceedings arise from the Assessment
Year 2013-14 wherein the revisionist has
disclosed the turn over of purchases and
sales as under:

(1) Total purchases
from
the
registered
dealers:
16,65,367.00
(2) Sales within U.P.
(a) Taxable
Rs. 65,400.00
(b) Non-taxable
Rs. 20,000.00
Total sales within U.P.
85,400.00
(3) Central Sales
Rs.
25,29,563.00
Gross Turn over of
sales:
Rs. 26,14,96300
678 INDIAN LAW REPORTS ALLAHABAD SERIES

4. It is stated that the revisionist has
also filed his detailed Statements of
Accounts. It is stated that while the
assessment proceedings were going on two
tax invoices collected by Mobile Squad
were considered by the Assessing Authority
and with regard to one of the said two tax
invoices, the Assessing Authority came to
the conclusion that the same was issued by
the revisionist, the said findings were
recorded on the basis of personal inspection
of the invoices (comparing them with the
actual invoices by the revisionist) and also
the fact that the revisionist did not lodge
any FIR when it came to his knowledge
that any parallel invoice is being issued. On
the
basis
of
the
said
invoice,
the
Assessment Authority rejected the Books of
Accounts and proceeded to assess taking
recourse to Section 28(2)(ii) of the U.P.
Value Added Tax Act, 2008 (hereinafter
referred to as the 'Act') for 'best judgement
assessment'. The said 'best judgement
assessment' was done on 31.3.2017 by an
ex-parte order, the revisionist filed an
application under section 32 of the Act for
recall of the ex-parte order. The Assessment
Authority proceeded to decide the matter
on merits and passed an order dated
04.12.2017 determining evaded purchase of
65,00,000.00 and evaded sales of Rs.
80,00,000/- (Rs. 60,00,000 Provincial &
Rs. 20 lacs Central Sales) and thus the tax
payable by the assessee was assessed at Rs.
17,50,000/- in Provincial case and Rs.
2,80,000/- in Central Sales.

5. The order dated 04.12.2017 was
rectified in respect of the Central Sales vide
order dated 18.12.2017.

6. Aggrieved against the order dated
04.12.2017, the revisionist preferred an
appeal before the Appellate Authority and
submitted
that
the
manner
of
best
judgement assessment was wholly arbitrary
and illegal inasmuch as only one bill
recovered or produced by the Mobile
Squad was found to be non-genuine and it
was argued before the Appellate Authority
that the assessment taking into account the
entire sales, the State as well as the Central
was an arbitrary exercise of power.

7. The Appellate Authority, vide order
dated 18.2.2018, was of the opinion that the
determination of the turn over on the basis
of 'best judgement assessment' was based
upon maintenance of parallel bill book
hence the evaded sales was assessed as
equal to the disclosed sales of the assessee
i.e. 26,15,000/-. As regards, the Central
Sales, the Appellate Authority was of the
opinion that as no evidence was on record
with regard to evasion of Central Sales
hence the demand for evaded Central Sales
was set aside.

8. Aggrieved against the said order, an
appeal was preferred before the Tribunal.
The
Tribunal
after
considering
the
arguments raised by appellant upheld the
order of the First Appellate Authority
placing reliance upon the judgement of this
Court in M/S Kapil Kumar & Brothers,
Gautam Budh Nagar vs. Commissioner
of Trade Tax (Vol. 34 NTN 2007, Page
171).

9. Aggrieved against the said
judgement dated 11.2.2020 the present
revision has been filed on the following
substantial questions of law:

"1.
Whether
on
the
facts
and
circumstances of the present case, it was
legally justified to enhance the taxable
turnover of sale by Rs. 26,15,000.00 under
the U.P. VAT Act merely on the basis of
single invoice of Rs. 11970-00?"
1 All. M/S B.S. Enterprises, Agra Vs. The Commissioner of Commercial Tax, U.P. Lucknow
679

2. Whether Tribunal was legally
justified to confirm the enhancement of
taxable turnover arbitrarily against the
principle of law laid down by this Hon'ble
court that determination of turn over
should be commensurate to the material
and evidence available on the record?

3. Whether, Tribunal was legally
justified in confirming the enhancement of
taxable furn over of sale in U.P. by Rs.
26,15,000-00 equal to gross sale of Rs.
26,14,963/- disclosed by the applicant for
the entire assessment year which includes
the Inter State Sales (Central Sales) of Rs.
25,19,563.00 accepted by the appellate
authorities?

4. Whether in view of provision of the
Act and settled law of this Hon'ble Court, it
was legally justified to impose the tax both
on determined taxable turnover of purchase
and sales without giving the benefit of input
tax credit to the applicant?"

10. The counsel for the revisionist
argued that while taking recourse to the
powers conferred upon the authority under
section 28(2)(ii) of the Act, the Assessing
Authority does not get absolute powers for
making the assessment. The said power has
to be exercised with caution and any
exercise of power which is prima facie
arbitrary has to be held contrary to the
powers conferred under section 28(2)(ii) of
the Act.

11. The counsel for the revisionist
has placed reliance upon the judgement
of this Court in the case of Ayyub
Traders vs. Commissioner, Commercial
Tax U.P. Lucknow, [2019 U.P.T.C. (Vol.
102)-1363] wherein this Court recorded
as under:

"Insofar as estimation of turnover is
concerned, normally, this Court does not
interfere if such an estimation is found
arising from material and evidence on
record, however, in the present case,
other than the two undisclosed bills
recording transactions worth Rs. 5,520/-
(in all), there is absolutely no material
considered by the assessing officer or the
appellate authority for the purposes of
making an estimation. It is a settled
position in law that the estimation made
must arise from and be proportionate to
the evidence of undisclosed turnover. In
the
instant
case,
as
against
the
undisclosed
turnover
Rs.
5,520/-
discovered, that too, on one date, i.e.
01.01.2006, the estimation as has been
sustained, bears no proportion being Rs.
5,25,000/-.
The
same
cannot
be
sustained.

Normally, this Court would have
remanded the matter to the fact finding
authority to record a proper finding of its
own, however, the Court cannot lose sight
of the fact that the assessment year in
question is 2005-06 and almost 14 years
have passed since then. If the matter were
to be remitted today, largely, it would be
a waste of time, inasmuch as the
assessment had arisen under the U.P.
Trade Tax Act, 1948 that came to be
repealed by the U.P.V.A.T. Act which, in
turn, has come to be repealed by the
G.S.T. Act, 2017.

Thus, to bring a closure to an old
dispute wherein the assessee appears to
have a genuine grievance and not to set a
rule as to the estimation to be made, the
estimation of undisclosed turnover be
pegged at Rs. 50,000/-. The assessment
may
stand
concluded
accordingly.
Question of law no. (ii) is answered
accordingly."

12. He further placed reliance upon
the
judgement
of
this
Court
dated
680 INDIAN LAW REPORTS ALLAHABAD SERIES
04.12.2017 in Sales/Trade Tax Revision
No. 317 of 2007 (M/s Vivek Agency Thru'
Prop. Gyan Prakash Kesarwani vs. The
Commissioner
of
Trade
Tax,
U.P.
Lucknow) wherein this Court has recorded
as under:

"Both the Assessing Authority as well
as the Tribunal have proceeded in the
matter without being educated by the
principles which must necessarily govern a
best judgment assessment. While it is true
that in the course of estimation of turnover
a certain degree of guess work must
necessarily be recognized as vesting and
inhering in the hands of the Assessing
Authority, the same cannot possibly be
construed as conferring a power to
estimate turnover in a wholly whimsical
manner as has been done in the facts of the
present case. The estimation of turnover of
Rs.10,00,000/- is based solely on surmises
and conjectures. The mere fact that the bill
in question bore the number 114, cannot
automatically lead one to conclude or hold
that it was preceded by 113 prior
transactions and that too of identical value.
Such a process of determination and
assessment in the case of a taxing statute
cannot be accorded approval by this
Court."

13. He has further placed reliance on
the judgement of this Court passed in
Sales/Trade Tax Revision No. 499 of 2015
(M/S Raj Pan Products Private Limited
vs. Commissioner of Commercial Tax
U.P. Lucknow) dated 20.1.2017 wherein
this Court has held as under:

"The authorities have not recorded
any finding as to how assessment has been
enhanced by almost 28 times. There has to
be some reasonable basis or nexus between
the escaped transaction noticed and the
consequential enhancement made by the
authorities.
This
Court
had
earlier
indicated that unless there exists other
material to come to a different conclusion,
the
authorities
could
enhance
the
assessment by twice the amount i.e.
Rs.1,40,000/-. The observations made by
this Court in the order dated 22.7.2015
does not appear to have been taken note of
in correct perspective and without any
independent material or finding, it has
reiterated the view taken earlier by it.
There is no finding that assessee had
persistently committed such default or that
it was done with deliberate intent.

In the facts and circumstances of the
present case, enhancement ought not to
have been made more than twice the
escaped transaction. The question of law
raised in this revision is accordingly
answered by holding that tribunal was not
justified in enhancing the turnover above
twice the escaped transaction in the facts
and circumstances of the present case, and
the enhancement to the tune of 28 times is
not justified."

14. In view of the judgements referred
above, counsel for the revisionist argues
that the assessment made against the
assessee, the appellate orders herein are
wholly arbitrary and illegal and deserves to
be set aside.

15. The Standing Counsel, on the
other hand, argues that there was no error
committed by Assessing Authority in
rejecting the Books of Accounts on the
basis of one bill, which on examination was
found to be issued by the assessee himself.
In support of the said contention, he has
placed reliance on the judgement of this
Court in case of M/S Kapil Kumar &
Brothers, Gautam Budh Nagar vs. The
Commissioner of Trade Tax (Vol. 34
1 All. M/S B.S. Enterprises, Agra Vs. The Commissioner of Commercial Tax, U.P. Lucknow
681
NTN 2007, Page 171) wherein this Court
had accepted the application of stay in
respect of fake bills. Surprisingly, in the
said judgement itself, while deciding the
issue on the quantum of assessment, this
Court recorded as under:

"The inference of the Tribunal that
every month suppressed sales had been
made against 100 bills is also not without
any basis. Taking the value of the each bill
at Rs. 1.29,000/-, total suppressed sale for
the entire year comes to Rs. 15.48 crores.
Tribunal has taken a very lenient view and
has estimated the suppressed sales only at
Rs. 1,54,46,975/-, which cannot be said to
be arbitrary or excessive."

16. Thus, in sum and substance, this
Court with regard to quantum accepted
10% of the escape sales not to be arbitrary
and excessive.

17.

The
jurisdiction
of
the
Assessing
Authority
while
taking
recourse
to
the
'best
judgement
assessment' is well settled. The Supreme
Court in the case of State of Kerala vs.
C. Velukutty, (1966) 60 ITR 239, The
Commissioner
of
Income
Tax,
Calcutta vs. Padamchand Ramgopal,
1970 (3) SCC 866, M/s Joharmal
Murlidhar and Co. vs. Agricultural
Income Tax Officer, Assam and others,
1970 (3) SCC 331 and Shri S.M.
Hasan, S.T.O. Jhansi and another vs.
M/s New Gramophone House, Jhansi,
(1976) 4 SCC 854 has categorically held
that while assessing, on the basis of 'best
judgement', the Assessing Authority has
to make the assessment honestly and on
the basis of an intelligent well-grounded
estimate rather than upon pure surmises.
The assessment so made while taking
recourse
to
the
'best
judgement
assessment' should not be speculative or
fanciful but on reasonable guess based
upon the material available before the
Assessing Authority.

18. In the present case, admittedly,
the one tax invoice, which was found to
be fake, was of Rs. 11,970/- and solely
on the basis of the said invoice, the
evaded sales has been assessed at Rs.
26,15,000/- i.e. 100% of the disclosed
sales.

19. Considering the judgements
placed by both the counsels, it is clear
that the Assessing Authority is bound to
act in a rational manner while resorting
to best judgement assessment in view of
the facts on record it is clear that only
one bill of Rs. 11,570/- was available as
material to assess the evaded sales.
There was nothing more before the
Assessing Authority to form an opinion
that sales equal to the declared sales
should be determined as evaded sales.

20. In view of the facts and
circumstances
and
following
the
judgements cited by Standing Counsel in
case of M/S Kapil Kumar & Brothers
(supra), I hold that the evaded sales
should be quantified as Rs. 2,61,500/-
that is the 10% of the total disclosed
sales for the purposes of determining in
the tax liability.

21. The liability of payment of tax
shall be calculated for the year 2014-15
treating evaded sales at Rs. 2,61,500/-.

22. Question of law no. 1, 2 and 3
are answered accordingly.

23. The revision is partly allowed.
----------
682 INDIAN LAW REPORTS ALLAHABAD SERIES
(2021)01ILR A682
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.11.2020

BEFORE

THE HON'BLE SURYA PRAKASH
KESARWANI, J.
THE HON'BLE DR. YOGENDRA KUMAR
SRIVASTAVA, J.

Writ Tax No. 400 of 2020

M/s Samtel Avionics Ltd. ...Petitioners
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioners:
Sri Anurag Khanna, Sri Shubham Agrawal,
Sanyukta Singh, Sri Shivam Shukla, Sri
Syed Fahim Ahmed

Counsel for the Respondents:
A.S.G.I., Sri B.K. Singh Raghuvanshi, Sri
Narendra Singh, Sri Krishna Agarwal, C.S.C.

(A) Civil Law - Sabka Vishwas (Legacy
Dispute
Resolution)
Scheme,
2019:
Section 124, 121, 123 - The words
"amount payable" has been defined in
Section 121(e) which is the arrears of
Tax dues under Section 123 less the
tax relief under Section 124. (Para 12)
- Tax - Calculation of amount payable.

The balance amount determined by the
designated authority and payable by the
petitioner
under
Section
127,
is
in
accordance with the provisions of Section
124(1)(c) read with Section 121(c)/(d) and
(e) of the Act which does not suffer from
any error of law. (para 13)

Writ Petition Rejected. (E-8)

(Delivered by Hon'ble Surya Prakash
Kesarwani, J. & Hon'ble Dr. Yogendra
Kumar Srivastava, J.)

1. Heard Sri Anurag Khanna,
learned Senior Counsel assisted by Sri
Shivam Shukla, learned counsel for the
petitioner, Sri Shashi Prakash Singh,
learned Assistant Solicitor General of
India assisted by Sri Krishna Agarwal,
learned counsel for Respondent No1
and Sri B.K. Singh Raghuwanshi,
learned counsel for Respondent Nos.2
and 3.

2. This writ petition has been filed
praying for the following reliefs:

"(a)
"certiorari"
quashing
and
setting
aside
the
circular
dated
25.09.2019 (Annexure No.8) passed by
the Designated Committee.

(b)
"certiorari"
quashing
and
setting aside the SVLDRS-3 dated
1.2.2020 (Annexure No.6) passed by the
Designated Committee.

(c)
mandamus
directing
the
Designated Committee to accept the
SVLDRS-1
Declaration
(Annexure
No.3) filed by the petitioner.

(d) Declaration that no amount of
tax or duty or impost is payable by the
petitioner.

(e)
Mandamus
directing
the
Respondents to grant the relief of
remission
on
Rs.8,23,50,252/-
in
accordance with Section 124(1)(c) and
grant
deduction
of
pre-deposit
thereafter.

(f) Issue any other Writ, order or
direction in favour of the petitioner
which this Hon'ble Court deems fit in
the facts and circumstances of the case.

(g) Award cost of the petition to the
petitioner."

3. Learned counsel for the petitioner
submits as under: