Assistant Commissioner (ST) Found Explanations in 39 Slips “Very Satisfactory” Yet Ordered Remand Instead of Allowing: Madras HC Quashes Order [Read Order]
Madras High Court held that once an authority finds an assessee’s explanations “very satisfactory,” it must allow the appeal and cannot remand the matter for reconsideration.
Madras - HC - order - Taxscan.
Madras - HC - order - Taxscan.
In a recent ruling, the Madras High Court held that when an authority has recorded that an assessee’s explanations for all entries in the seized records are “very satisfactory,” it should allow the appeal instead of remanding the matter for fresh consideration.
V.V. Vanniaperumal & Sons, engaged in the manufacture and sale of gingelly oil and allied products, reported a turnover of Rs. 48.46 crore for the assessment year 1996-97. During an inspection on 24 February 1997, officials recovered 39 slips containing details of business transactions, referred to as D7 records.
The Assessing Officer treated the entries as evidence of suppression of sales and completed a best judgment assessment after rejecting the company’s explanation.
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The assessee filed an appeal before the Appellate Assistant Commissioner, who recorded that the company had given “very satisfactory” explanations for each of the 39 slips with reference to its books of accounts.
Instead of allowing the appeal, the authority remanded the matter to the Assessing Officer on the ground that copies of the D7 records were not furnished to the assessee, which was said to violate principles of natural justice.
The assessee challenged the remand before the Sales Tax Appellate Tribunal, contending that once the appellate authority had accepted the explanations as satisfactory, there was no basis for remand. They argued that the authority had not been asked to order a remand on grounds of natural justice and that the issue had never been raised by the assessee.
The Revenue’s counsel argued that the remand was necessary as the Assessing Officer had not provided copies of the D7 slips and had failed to give the assessee an opportunity to substantiate its claims. They submitted that the remand would allow the assessee to produce further documents and ensure compliance with natural justice.
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The Division Bench comprising Justice P. Velmurugan and Justice K.K. Ramakrishnan observed that the Appellate Assistant Commissioner had already made a clear finding that the assessee’s explanations were “very satisfactory.”
The court explained that once the authority accepts the assessee’s explanation and finds the burden discharged, it must dispose of the appeal on merits instead of remanding the case.
The court also pointed out that the Tribunal had ignored the binding precedent in 54 STC 135 and had acted inconsistently by allowing the assessee’s appeals under the CST Act for the same year while sustaining the remand under the TNGST Act on identical facts.
The court held that the remand order was unsustainable. It set aside the Tribunal’s order and quashed the remand directed by the Appellate Assistant Commissioner. The appeal filed by the assessee was allowed.
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