Allahabad High Court
S/S UNIVERSAL ENTERPRISESversusTHE COMMISSIONER COMMERCIAL TAX UP LUCKNOW
- Decided
- Bench
- PIYUSH AGRAWAL
Holding
Information received from a third party cannot be used to reject an assessee's books or make a best‑judgment assessment unless the assessee is afforded an opportunity to rebut it.
Summary
S/S Universal Enterprises, a fuel‑wood dealer, challenged a best‑judgment assessment for AY 2016‑17 under the Uttar Pradesh Value Added Tax Act, 2008. The assessing authority had rejected the assessee’s books and enhanced tax liability solely on information that a third‑party firm, S.S. Enterprises, had purchased from the assessee, without any cross‑examination or material to substantiate the claim. The Commercial Tax Tribunal upheld the assessment, but the High Court held that, following the precedent in Durga Agro Industries Ltd. v. Commissioner Commercial Tax U.P., third‑party information cannot be used to reject books or make a best‑judgment assessment unless the assessee is given a chance to rebut it. Consequently, the Tribunal’s order was set aside and the matter remanded for a fresh order accepting the assessee’s books. The revision petition was allowed.
Issues considered
- Whether the Commercial Tax Tribunal was justified in rejecting the assessee's books and making a best‑judgment assessment in the absence of adverse material.
- Whether the Tribunal could uphold the assessment while a criminal trial concerning the same facts was pending before the Additional Chief Judicial Magistrate, Rampur.
- Whether the Tribunal erred in confirming the rejection of books and best‑judgment assessment contrary to the law laid down in Durga Agro Industries Ltd. v. Commissioner Commercial Tax U.P.
Legislation cited
Subjects
- VAT
- best judgment assessment
- rejection of books of account
- third‑party evidence
- cross‑examination
- revision petition
- Commercial Tax Tribunal
- Uttar Pradesh
Judgment
HIGH COURT OF JUDICATURE AT ALLAHABAD
SALES/TRADE TAX REVISION No. - 69 of 2024
S/S Universal Enterprises
.....Revisionist(s)
Versus
The Commissioner Commercial Tax Up Lucknow
.....Opposite
Party(s)
Counsel for Revisionist(s) : Aditya Pandey, Rahul Yadav
Counsel for Opposite Party(s) : C.S.C.
Court No. - 7
HON'BLE PIYUSH AGRAWAL, J.
1. Heard Shri Aditya Pandey, learned counsel for the revisionist and
learned ACSC for the State - respondents.
2. This is a revision petition filed for the assessment year 2016-17 under
the Uttar Pradesh Value Added Tax Act, 2008 (hereinafter referred to as "
the Act") against the order dated February 22, 2024 passed by
Commercial Tax Tribunal, Moradabad in Second Appeal No. 265/2024
for the assessment year 2016-17.
3. The above-noted revision was admitted by this Court vide order dated
23.05.2024 on the following question of law:-
"A. Whether on the facts and circumstances of the case the Commercial Tax Tribunal
as well as the authorities below were legally justified in rejecting the account books of
the applicant and making the best judgment assessment when no adverse material was
available on record against the applicant?
C. Whether on the facts and circumstances of the case the Commercial Tax Tribunal
was legally justified in rejecting the account books and making best judgment
assessment when the trial is pending in relation the same facts and circumstances
before the Additional Chief Judicial Magistrate, Court No.3, Rampur in Case No.291
of 2020?
D. Whether on the facts and circumstances of the case the Commercial Tax Tribunal
was legally justified in confirming the rejection of account books and best judgment
assessment in violation of law laid down by this Hon'ble Court in the case of Durga
STRE No. 69 of 2024
2
Agro Industries Ltd. Vs. Commissioner Commercial Tax U.P. reported in (2013) 23
VLJ 212 ?"
4. Learned counsel for the revisionist submits that the revisionist is
engaged in the business of fuel wood, inlogs, inbillets, intwigs, etc. as
well as packing materials. He further submits that the present revision
relates to the assessment year 2016-17. He further submits that the
assessing authority, while passing the assessment order dated 29.02.2020,
has rejected the books of account of the revision and enhanced the
turnover as well as levied tax on the basis of the information received that
S.S. Enterprises, Aligarh, having Tin No. 09225216119 has shown certain
purchases from the revisionist and on the said premise, the assessing
authority proceeded to pass the order against the revisionist. He further
submits that neither any material was brought on record to justify the said
sales made by the revisionist, nor the Proprietor of the M/s SS Enterprises
was cross-examined and only on the basis of the information received
from the third party, the books of account cannot be rejected. In support
of his submissions, he has placed reliance on the judgement of this Court
in M/s Durga Agro Industries Limited Vs. CTT [STRE No. 1556/2007,
decided on 21.10.2013]. He further submits that the matter travelled upto
the Tribunal and the Tribunal, vide impugned order, has dismissed the
appeal of the revisionist.
5. Per contra, learned ACSC supports the impugned order and submits
that since the sales have been brought on record made by the revisionist
through S.S. Enterprises, therefore, the impugned order is justified.
6. Rebutting the said submission, learned counsel for the revisionist
submits that not only the M/s S.S. Enterprises was ever put to cross-
examination, but also FIR and charge sheet have also been filed showing
criminal case registered against the Proprietor of M/s S.S. Enterprises, but
the same has not been considered.
7. After hearing learned counsel for the parties, the Court has perused the
record.
8. The record shows that the assessing authority has enhanced the
turnover as well as levied tax on the revisionist only on the basis of the
STRE No. 69 of 2024
3
information received against the revisionist that certain sales have been
made to M/s S.S. Enterprises, Aligarh, which have not been shown in the
books of account, but the Proprietor of M/s S.S. Enterprises was never put
to cross-examination despite request being made by the revisionist. The
alleged sales made to M/s S.S. Enterprises cannot be utilized against the
revisionist, without cross-examination of the Proprietor of the firm. This
Court in M/s Durga Agro Industries Limited (supra) has held that
information received from the third party cannot be utilized, unless
rebutted.
9. The case in hand is covered by the judgement of this Court in M/s
Durga Agro Industries Limited (supra).
10. Accordingly, the order of the Tribunal dated 22.02.2024 is set aside.
11. The matter is remanded to the Tribunal for passing a fresh order
accepting accounts books of the assessee-revisionist and pass a fresh
order in accordance with law within a period of four months from the date
of production of a certified copy of this order.
12. The revision succeeds and is allowed.
13. The question of law is answered accordingly.
(Piyush Agrawal,J.)
May 7, 2026
Amit Mishra
Digitally signed by :-
AMIT KUMAR MISHRA
High Court of Judicature at Allahabad
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