BY TIOL News Service

CHENNAI, JUNE 21, 2018: THE ISSUE is - Whether the Writ Court can step into the shoes of Appellate Authority even when, assessee has failed to respond to the revision notice and also to discharge its onus to prove that its registered business place was shifted to a different venue. And the answer is NO.

Facts of the case:

The assessee company, engaged in selling of iron and copper scrap by purchasing the same from TANGEDCO, had returned income for the relevant AY. During the assessment proceeding, it was noted that the assessee had purchased iron scrap in the AY 2012-13 from one M/s.Transtonnelstroy Afcons on payment of VAT. The assessment for the said year was deemed to have been completed u/s 22(2). However, after a period of 2 years, an inspection of the assessee's business premises was conducted wherein, it was noted that the adjusted claim of ITC was maintained in the carry forward register. Further, the Enforcement Wing officers also found that the assessee had no stock in its registered place of business. Later, it was then noted that the assessee had stored goods worth Rs.80,68,500/- at a place in Pulichipallam post, which is not a registered place of business at the time of inspection. Moreover, no purchase cum stock account was maintained by the assessee for the goods held at the said unregistered place as provided under Rule 6(2)(b).

Consequently, a revision notice was issued by the Revenue. The Revenue noticed that though the assessee had mentioned that they had applied for godown certificate on 20.07.2015, the letter given to the AO was only on 31.07.2015 i.e., after the date of inspection. Therefore, the Revenue provisionally concluded that the goods stored were unaccounted and not tax suffered as claimed by the assessee. It was found by the Revenue that the assessee had suppressed the purchases and sales and accordingly, estimation was made in the notice. However, no reply was submitted by the assessee. After waiting for a reasonable amount of time, the Revenue proceeded to pass the order by confirming the proposals made in the revision notice. Subsequently, the ITC availed by the assessee were reversed, apart from levying the penalty u/s 27(4)(ii).

High Court held that,

++ the assessee did not submit its objections to the AO, though sufficient opportunity was granted to them. The allegation that the partner was sick and unable to submit objections to the revision notices, has not been substantiated. Therefore, the assessee cannot contend that the orders in dispute have been passed in violation of the principles of natural justice, but it is the case where the assessee has failed to avail the opportunity granted to them and therefore, the assessee cannot be permitted to take advantage of their own wrong. The Counsel for the assessee strenuously contended that intimation was given to the Revenue about the change of godown and in this regard referred to the letter dated 28.12.2014, wherein it is alleged that the assessees have shifted the godown, w.e.f. 05.11.2014, and submitted the letter on 28.11.2014, and stated that they have paid the processing fee on 24.09.2014. The letter states that they are opening a new godown and it is not clear in the said letter as to which was the registered godown earlier to 28.11.2014. The second letter which was referred to by the assessee is dated 31.07.2015, wherein the assessee claimed that they have changed their branch address w.e.f. 20.07.2015. The processing fee has been remitted by demand draft dated 08.07.2015. To be noted is that the inspection of the assessee's place of business was conducted on 23.07.2015 and the letter for change of branch address was admittedly given after the date of inspection. Prima facie, the Court is of the view that there is no clear record to show as to on which date the new godowns were opened, and when they commenced operation. However, the Court does not propose to dwell further into the matter, as the issues are disputed questions of fact, which obviously cannot be adjudicated in a Writ Petition;

++ unless and until the assessee is able to factually establish that they had, infact carried on business in a particular premises from a particular date and shifted from the premises to an another premises, the question of applying the legal principles in various decisions relied on by the petitioner, does not arise. The burden of proof lies on the assessee to establish that they had been functioning at a particular location, which is the registered place and shifted to a different venue from 05.11.2014 and thereafter, shifted to another venue on 20.07.2015. Admittedly, the assessee has not placed any documents before me to establish that the business commenced in these two godowns on the dates mentioned by the assessee in their representation as well as in the Writ Petitions. Above all, the assessee ought to have responded to the revision notices dated 13.10.2017 and placed materials before the Revenue for consideration. Without doing so, to refer to the statement recorded by the Enforcement Wing and to state that the AO should have perused the statement is an argument, which is stated to be rejected;

++ the Counsel for the assessee produced a tabulated statement of the sales turnover for the AY 2015-16 and took strenuous efforts to convince the Court that there is absolutely no purchase suppression and whatever has been dealt with by the assessee has been reflected in their returns and appropriate tax paid on the transactions. Once again, it has been pointed out that this Court cannot dorn the role of an AO or the Appellate Authority and peruse the statement of accounts, details of sales turnover and to examine the conduct of the assessee. Thus, this Court is not inclined to entertain the Writ Petitions on the ground that the assessee has an effective alternate remedy under the Act. Thus, the merits of the case are left open to be agitated before the Appellate Authority, who shall decide the appeal on merits and in accordance with law uninfluenced by any observations made in this order.

(See 2018-TIOL-1162-HC-MAD-VAT)