IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 265 of 2009()
1. M/S.SUNNY JACOB JEWELLERS AND WEDDING
... Petitioner
Vs
1. THE STATE OF KERALA.
... Respondent
For Petitioner :SRI.C.K.THANU PILLAI
For Respondent : No Appearance
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice V.K.MOHANAN
Dated :25/11/2009
O R D E R
C.N.RAMACHANDRAN NAIR &
V.K.MOHANAN, JJ.
---------------------------------------------
S.T.Rev.No. 265 of 2009
---------------------------------------------
Dated this the 25th day of November, 2009
J U D G M E N T
Ramachandran Nair,J:
This revision is filed by the assessee which was
engaged in gold jewellery business at Kottarakkara
during the year 2004-05. While conducting inspection in
the premises of the sister concern of the petitioner at
Kottayam, the authorities found assessee’s purchase of
massive quantity of 14.42488 Kgms. of gold from two
dealers, located in Bangalore, the value of one purchase
being Rs.82,94,306/-. However, when the books of
accounts of the petitioner which was carrying on
business at Kottarakkara, were examined, it was found
that the purchase turnover was not accounted in the
returns filed nor in the certificate of account produced in
Form 50B. However, the assessee claimed this as
transaction of loan of stock for exhibition in their shop.
S.T.Rev No.265 of 2009
:-2-:
The detection of suppression led to penalty which is stated
to be pending before the higher authorities. In the course
of assessment, the assessing officer rejected the
petitioner’s explanation of loan arrangement for exhibition
and made best judgment assessment by including the
suppressed turnover together with probable suppression
estimated by the officer. The first appeal was
unsuccessful and therefore, the petitioner filed second
appeal before the Tribunal. The Tribunal substantially
confirmed the order of the first appellate authority, but
granted minor modification pertaining to addition towards
the purchase of packing material. It is against this order
of the Tribunal, the petitioner has filed this revision
petition.
2. We have heard Advocate Sri.C.K.Thanu Pillai,
appearing for the petitioner and the Government Pleader
for the respondent.
3. Even though counsel for the petitioner pressed
S.T.Rev No.265 of 2009
:-3-:
for acceptance of the loan transaction, we are unable to
accept the same because until detection of the suppressed
purchases in the course of search in the premises of
petitioner’s sister concern at Kottayam, the petitioner had
not disclosed anywhere in the returns filed or in the
accounts, any such arrangement. The gold involved is a
huge quantity of 14.42488 Kgms. valued at around Rs.83
lakhs and no one would give such huge quantity of gold
valued so much to any person without at least adequate
security and charges for use of the gold for exhibition.
The petitioner has not even furnished the details of items
of gold alleged to have been taken from the other dealer
for exhibition. No documents of transport or transit
insurance, security furnished or charges paid are
produced. Obviously, in our view, all the authorities
rightly found that the claim of taking stock from another
dealer for exhibition is a bogus story and we therefore
reject the same. The petitioner has also not produced any
S.T.Rev No.265 of 2009
:-4-:
document from the so-called owners of the gold to prove
the transaction. Therefore, the petitioner’s claim for loan
arrangement for exhibition does not stand established.
The only presumption is unaccounted purchase of old gold,
conversion of the same into the new ornaments and the
sale of the same in the shop of the petitioner without
accounting such sales.
4. The counsel contended that even if the
transaction is found to be interstate purchase from
Bangalore suppressed by the petitioner, the same should
not lead to addition for levy of purchase tax under Section
5A which can be only on local purchase in the State. Even
though the argument is quite attractive, we are unable to
accept the petitioner’s claim of interstate purchase
because the same does not stand proved. Further, since
substantial amount is seen accounted towards labour
charges paid in Kerala, the only presumption is that the
interstate transaction claimed from the parties in
S.T.Rev No.265 of 2009
:-5-:
Bangalore can be only local purchase of old gold
ornaments, conversion of the same to new gold ornaments
and sale of the same by suppression of both purchase of
old gold and sale of new gold ornaments. So much so,
purchase tax on old gold as well as sales tax on
corresponding suppressed sales turnover were rightly
levied. Therefore, in principle, we uphold the order of the
Tribunal confirming the rejection of the books of accounts
and estimation of turnover. The only course open to the
assessing officer was only estimation on a rational basis.
It is seen that estimation is made both for purchases of old
gold ornaments and corresponding sale of new gold
ornaments with gross profit addition. Since the petitioner
had commenced business in 2004-05 and the Department
had not detected any other unaccounted purchases other
than the massive quantity referred above, we feel, three
times addition on purchase and sales is on the higher side.
We feel, the addition of equal amount for the suppression
S.T.Rev No.265 of 2009
:-6-:
both for the purpose of purchase tax and sales tax will
serve the ends of justice. We, therefore, modify the
assessment confirmed by the first appellate authority and
the Tribunal, by reducing the addition to equal amount. In
other words, the total estimation will be twice the value of
suppression with proportionate gross profit addition for
both purchase tax and sales tax.
The revision is allowed to this extent.
sd/-
C.N.Ramachandran Nair,
Judge.
sd/-
V.K.Mohanan,
Judge.
MBS/
-True Copy-
P.S.to Judge.
S.T.Rev No.265 of 2009
:-7-:
C.N.RAMACHANDRAN NAIR
&
V.K.MOHANAN, JJ.
—————————————————
I.T.A.NO. OF 200
——————————————–
S.T.Rev No.265 of 2009
:-8-:
J U D G M E N T
DATED: -9-2009
S.T.Rev No.265 of 2009
:-9-: