NATIONAL RADIO ELECTRONICS CORPORATION, vs. DEPUTY COMMISSIONER OF STATE TAX,

The prayer in the writ petition is to quash Ext.P3 modified assessment order to the extent it sustains defect No.II noted in the pre-assessment order, pertaining to purchase suppression, and, to declare that the rejection of the documents produced by the petitioner on the reason that the petitioner has not produced the credit notes, is against the directions in Ext.P1 appellate order.

The Appellate Authority had by Ext.P1 order dated 22.02.2021 directed modification of assessment and also directed the appellant to produce complete books of accounts and supporting documents before the assessing authority. Thereafter, by Ext.P3 order the assessing authority has answered defects I, III, IV, V and VI noticed earlier, in favour of the assessee.

As far as defect No.II is concerned, the assessing authority noted that KVATIS data revealed that the assessee effected purchases from certain registered dealers and that the verification revealed gross mismatch in the invoice particulars reported by the assessee and the corresponding seller dealers. The assessing authority has taken it as evidence to show unaccounted purchase. It is also stated that there are differences in the invoice numbers, invoice date and value of goods/tax collected. After listing out the details of the invoices it is stated that the assessee was directed to produce the above invoices in original for verification failing which it was proposed to make additions.

The assessee submitted detailed reply. The assessing authority noted that the assessee has produced the entire 959 Nos. of purchase invoices in original and that except for 53 purchase invoices, the rest were found to be accounted. The list of the 53 invoices is shown as a table in the order.

The contention of the assessee is that invoices are raised without any purchase orders and the said invoices had been returned to the supplier, as there were no corresponding purchase or supply of goods. However, the same has been shown as sales return in the returns filed by the suppliers. The assessing authority has rejected the contention stating that it is a prevailing tax evasion practise, where the suppliers and the buyer dealer collude together and form an illicit agreement and supply of goods are effected on properly issued sales invoices and after completing the sales transaction and transportation, the supplier shows the same as sales return in the returns filed and the buyer shows it as goods not received. Except for stating that there is such a practise, there is nothing to show that the goods were actually received by the petitioner or the invoices were issued on the basis of purchase orders. The officer has stated that the burden of proof is on the assessee under Section 9 of the Act and the assessee failed to produce valid documentary evidence to prove the claim. The said finding cannot be justified, since the assessee cannot be asked to prove a negative. The assessee cannot be expected to prove that he had not purchased or received goods. The reasoning ultimately is that the petitioner has failed to produce proof of sales return. According to the petitioner, there cannot be a sales return if there has been no sale at all.

The Government Pleader raised two contentions against the challenge. Reliance was placed on the decision in The Bhopal Sugar Industries Ltd. v. The Income-Tax Officer, Bhopal [AIR 1961 SC 182], to submit that once the Appellate Authority had remanded the matter for consideration of the assessing officer, it is for the assessing officer to independently consider and pass orders. It is also submitted that under Section 9 of the Act it is for the petitioner to prove the transaction if he is called upon by the assessing officer to do so. There can be no quarrel with the above said propositions. The Bhopal Sugar (Supra) specifically says that if a Subordinate Tribunal refuses to carry out directions given to it by a Superior Tribunal in exercises of its appellate powers, the result will be chaos in the administration of justice.

This is not a case where there is a refusal by the respondent to carry out the directions of the Superior Tribunal. As a matter of fact, all other defects noticed earlier were answered in favour of the assessee, pursuant to the directions issued by the Appellate Tribunal. As far as the defect No.II is concerned, as already observed, the reasoning of the assessing officer cannot be sustained. Even though the burden of proof is on the assessee, the assessee can only be expected to prove what is possible of proving and he cannot be expected to prove a negative. He cannot prove a transaction which does not exist according to him. There is no logic or reason to direct the assessee to prove a sales return, when the contention is, there is no sale. The said direction can be justified only if there is a proof of sale. In the above view of the matter, this writ petition is allowed and the finding regarding defect No.II in Ext.P3 order is set aside. Needless to say, there cannot be any recovery proceedings based on the findings in Ext.P3 with regard to defect No.II. T.R.RAVI JUDGE SKP/28-02