The State of Tamil Nadu vs Tvl. Velan Hotes Limited, Tirupur

D. Murugesan, J.—The Revenue has filed the Tax Case Appeal raising the following substantial questions of law:-

Whether in the facts and circumstances of the case, the Appellate Tribunal is right in law in dismissing the appeal filed by the State without

considering the objection filed by the Department with regard to admissibility of new records before the Appellate Assistant Commissioner (CT)

which is violation of Section 39-B(2) of the Tamil Nadu General Sales Tax Act, 1959 ?

Whether in the facts and circumstances of the case, the Appellate Tribunal is right in law in deleting the first sales of assets, sundry receipts and

estimation of first sales of unserviceable articles ?

For consideration of the above questions, the following facts are referable. Certain documents which were produced before the Appellate

Assistant Commissioner while the appeal was heard were not produced by the assessee before the Assessing Officer. The documents were

considered and taken into account by the Appellate Assistant Commissioner in order to allow the claim of the assessee. On appeal before the

Tribunal, the Revenue contended that in terms of Section 39(B)(2) of the Tamil Nadu General Sales Tax, the documents should not have been

entertained by the Appellate Assistant Commissioner as additional evidence and consequently should not have relied upon those documents in

favour of the assessee. In spite of the said question raised, the Tribunal, without answering the said issue, had proceeded to decide the appeal on

merits and ultimately dismissed the appeal filed by the Revenue. Under the circumstances, the present tax case revision is filed.

Admittedly, before the Appellate Assistant Commissioner, at least the two following records were filed, viz., the records to show that the

assessee have distributed service charges amongh the staff members and the purchase bill of the purchases made from M.A. Ethirajulu Naidu and

Karim''s Hotel Supplies and Services. Both the records have been taken into consideration by the Appellate Assistant Commissioner and had been

relied upon in the order.

The contention of the learned Government Advocate is that before entertaining these documents, the Appellate Assistant Commissioner ought to

have recorded his reason in writing in terms of Section 39B(2) of the Tamil Nadu General Sales Tax Act. There is no such reason recorded

satisfying himself as to the genuineness of the records and the failure of the assessee to produce the same before the Assessing Officer due to the

reason beyond the control of the dealer. The further grievance of the learned Government Advocate is that in spite of such a ground being raised in

the appeal, the Tribunal failed to consider.

On the other hand, Mr. Ramanathan, learned counsel appearing for the respondent/assessee would submit that it is not as if that u/s 39B (2), the

Appellate Assistant Commissioner should give reasons in writing as to the genuineness of the documents and as to the failure of the dealer to

produce the documents in time before the Assessing Officer, as such satisfaction would be only in respect of such account, register, record or

documents relating to the day-to-day transaction of the business; on the other hand, the documents produced before the Appellate Assistant

Commissioner are not the documents relating to the day-to-day transaction and therefore, the provisions are not applicable. Nevertheless, the

learned counsel would submit that when these additional materials were produced before the Appellate Assistant Commissioner, the Revenue did

not object and they allowed the Appellate Assistant Commissioner to consider those documents and pass orders.

We have considered the above submission. Section 39B(2) of the Act reads as under:-

39-B. Production of accounts.-(1) Every dealer liable to pay tax under this Act, shall make available to the assessing authority any account,

register, record or other document relating to the day-to-day transaction of his business.

(2) The Appellate Assistant Commissioner, or the Appellate Deputy Commissioner shallnot, for the first time, receive in evidence on behalf of any

dealer in any appeal, such account, regiser, record or document as is mentioned in sub-section (1), unless for reasons to be recorded in writing, he

considers that such account, register, record or document is genuine and that the failure to produce the same before the assessing authority was for

reasons beyond the control of the dealer.

(3) Except as provided in sub-section (2) no Appellate authority or revising or reviewing authority shall, for the first time, receive in evidence on

behalf of the dealer any such account, register, record or document as is mentioned in sub-section (1).

Sub-section (1) contemplates that it is the duty of every dealer who is liable to pay tax under the Act to make available to the assessing authority

any account, register, record or other documents relating to the day-to-day transaction of their business. However, before the Appellate Assistant

Commissioner, the dealer would be entitled to produce additional documents, such as account, register, record or documents as mentioned in sub-

section (1). Such a right is given to the dealer only in the circumstances where the dealer could not produce those documents before the assessing

officer for the reasons beyond their control. Thus, sub-section (2) has three limbs. As far as the first limb is concerned, it gives a right to the dealer

to produce the documents referred to under sub-section (1) of Section 39B before the Appellate Assistant Commissioner; the second limb is as to

the satisfaction of the Appellate Assistant Commissioner by giving reasons in writing in regard to the genuineness of the documents; and the third

limb is that such reason must also with regard to the failure of the dealer to produce those documents before the asessing authority which was

beyond their control. The order of the Appellate Assistant Commissioner on merits has to suffer in the event he fails to give reasons recorded in

writing in respect of genuineness of the documents and the failure of the assessee in not producing those documents before the asessing officer for

the reason that the same was beyond their control.

The assessing officer also would be entitled to consider whether the documents produced are relating to the day-to-day transaction of the

business. If those documents do not relate to the day-to-day transaction of the business, the provision of sub-section (2) relating to giving reasons

in writing does not apply. However, even for that purpose, the Appellate Assistant Commissioner should give reasons stating that the documents

do not fall under sub-section (1) of Section 39B. A reading of the Appellate Assistant Commissioner''s order does not indiate of any consideration

with regard to application of the provisions of sub-section (2) of Section 39B. In such event, the documents produced by the assessee before the

Appellate Assistant Commissioner should not have been relied upon.

That apart, before the Tribunal, the Revenue has raised the very same issue, namely, that the Appellate Assistant Commissioner ought not to

have entertained these documents in terms of Section 39B(2). The Tribunal has also not considered the issue and there is no answer. In such event,

the order of the Tribunal also should suffer.

The above provision came up for consideration before this Court in the case of State of Tamil Nadu v. Shah Moolchand Kasthurchand and

Another (2010) 33 VST 529, wherein this Court has also observed as follows:-

A reading of the abovesaid provision would show that clause (1) of the said section would make it clear that every dealer is to make available to

the assessing authority any account, register, record or other document relating to the ""day-to-day transaction"" of his business. Similarly of a

reading of clause (2) would make it clear that the Appellate Assistant Commissioner shall not receive the said evidence for the first time in the

appeal unless for the reason to be recorded in writing to the effect that the said documents are genuine and the failure to produce the same before

the assessing authority was for the reasons beyond the control of the dealer. The said embargo appears to have been incorporated only in order to

see that the assessee should not be allowed to recast his accounts by plugging the holes pointed out in the assessment order.

For the above reasons, we are of the considered view that both the orders of the Appellate Assistant Commissioner as well as the Appellate

Tribunal must be set aside and the matter has to be remitted back to the Assessing Officer for fresh consideration. Accordingly, the orders of the

Appellate Assistant Commissioner and the Appellate Tribunal are set aside and the matter is sent back to the Assessing Officer for fresh

consideration. Mr. Ramanathan, learned counsel appearing for the respondent, has submitted that the records pertaining to the tax case revision

maintained by the Tribunal and for that matter, by the Appellate Assistant Commissioner, should be sent back to the Assessing Officer for fresh

consideration. The said submission is reasonable and therefore, while directing the Assessing Officer to redo the above exercise, he shall consider

the entire documents and for that reason, all the records including the additional documents/records produced by the assessee before the Appellate

Assistant Commissioner should also be sent to the Assessing Officer. In the event of any difficulty in tracing the additional documents filed by the

assessee before the Appellate Assistant Commissioner, the assessee is also entitled to produce the copies of the same documents and satisfy the

Assessing Officer as to the genuineness of the same.

The Tax Case Revision is, accordingly, disposed of. No costs.