1 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 APHC010063752021 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3488] FRIDAY, THE TWENTY FIRST DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO THE HONOURABLE SRI JUSTICE HARINATH.N WRIT PETITION NO: 3979 & 5428 of 2021 W.P.No.3979/2021 Between: M/s.Nandini Food Products, ...PETITIONER AND The State Of Andhra Pradesh and Others ...RESPONDENT(S) Counsel for the Petitioner: 1. VENKATRAM REDDY MANTUR Counsel for the Respondent(S): 1. GP FOR COMMERCIAL TAX WRIT PETITION NO: 5428/2021 Between: M/s Nandini Food Products ...PETITIONER AND The State Of Ap and Others ...RESPONDENT(S) Counsel for the Petitioner: 1. VENKATRAM REDDY MANTUR Counsel for the Respondent(S): 1. GP FOR COMMERCIAL TAX 2 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 The Court made the following Order: (per Hon’ble Sri Justice R. Raghunandan Rao) Heard Sri P. Girish Kumar, learned Senior Counsel representing Sri M. Venkatram Reddy, learned counsel appearing for the petitioner, and learned G.P. for Commercial Tax, appearing for the respondents. 2. The petitioner was registered under the A.P. Value Added Tax Act, 2005 (for short ‘the Act’) and was in the business of purchase and sale of vegetable oils, Vanaspathi Oils, Turmeric, Chillies etc.The Commercial Tax Officer, Sitarampuram Circle, No-II Division, Vijayawada, on proper authorization, had conducted an audit of the accounts of the petitioner and passed common assessment orders, dated 25.03.2015, for the tax periods April, 2013 to March, 2014. A tax of Rs.25,02,756/- was demanded on the basis of the said assessment orders. 3. It may be noted that the assessment order, was primarily based on certain computer print outs and two incriminating diaries, which had been recovered from the petitioner. In fact, the assessment orders were on a best judgment assessment, after taking into account the various entries found in the computer print outs and the incriminating diaries. Aggrieved by the said orders, the petitioner moved an appeal before the Appellate Deputy Commissioner, Vijayawada, who remanded the matter back to the Commercial Tax Officer. Subsequent to the order of remand, the Commercial 3 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 Tax Officer, Seetharampuram, passed fresh assessment orders reducing the demand to Rs.1,68,540/-. The Additional Commissioner, exercising the powers under Section 32 of the Act, revised the orders of the Appellate Deputy Commissioner and the consequential orders of the Commercial Tax Officer, Seetharampuram, and ordered restoration of the original assessment orders passed by the Commercial Tax Officer on 25.03.2015. By virtue of the said order of revision the petitioner became liable to pay tax of Rs.25,02,756/-. As a tax of Rs.3,12,845/- had been paid, the balance tax amount remained at Rs.21,89,911/-. 4. Aggrieved by the order of review passed by the Additional Commissioner, the petitioner had approached this Court by way of W.P.No.3979 of 2021. In a parallel proceeding, the Commercial Tax Officer had issued a show cause notice, dated 23.06.2020 proposing to levy a penalty of Rs.25,02,756/-, and after hearing the petitioner, passed an order of penalty dated 12.01.2021, confirming the demand of Rs.25,02,756/-. Aggrieved by the said order of penalty, the petitioner has filed W.P.No.5428 of 2021 before this Court. 5. Sri P. Girish Kumar, learned Senior Counsel appearing for Sri M. Venkatram Reddy, learned counsel for the petitioner, contends that initial assessment made by the Commercial Tax Officer on 25.03.2015 and the orders of revision of the Additional Commissioner dated 14.06.2019, are based solely on the computer print outs and the alleged incriminating diaries. 4 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 Apart from this material, there is no other material available for making any kind of estimate of any alleged suppressed turnover. The learned Senior Counsel would contend that the alleged computer print outs did not contain any details of any actual transactions. The petitioner was developing a customized software for tracking the transactions of the petitioner. As a part of the development of such software, a trial run was made by picking up random names and figures. The Commercial Tax Officer assumed and held that these print outs related to actual transactions when they were only random figures entered in the software for testing it. The learned Senior Counsel would further contend that no attempt was made for verifying whether such transactions had any basis by verifying the transport documents, the accounts of the petitioner or by verifying any of the attendant facts which would have shown whether there was any suppression of turnover. The learned Senior Counsel would contend that in the absence of such an effort, reliance could not have been placed on the computer print outs or the alleged incriminating diaries. The learned Senior Counsel would further contend that the Appellate Deputy Commissioner, having noticed these facts, had applied the law correctly and had set aside the original assessment order and remanded the matter back to the Commercial Tax Officer for a proper assessment, based on settled principles of law. 6. The learned Senior Counsel submits that the Commercial Tax Officer, after receipt of the appellate order, had applied the said principles correctly and had reduced the tax liability from Rs.25,02,756/- to 5 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 Rs.21,89,911/-. The learned Senior Counsel submits that the Additional Commissioner, ought not to have interfered with the said orders of the Appellate Deputy Commissioner or the subsequent assessment order. However, the Additional Commissioner, without applying the appropriate principles of law, had held that mere existence of such documents is sufficient to make a best judgment assessment. The learned Senior Counsel relying upon the judgments in M/s. Viceroy Hotels Ltd., Hyderabad1would contend that setting aside the orders of the Appellate Deputy Commissioner and the consequential second order of assessment and restoring the first order of assessment was clearly impermissible and requires to be set aside. 7. Heard the learned Government Pleader for Commercial Tax, who relied upon the orders of the Additional Commissioner, to point out that the existence of the incriminating material is sufficient to undertake a best judgment assessment. 8. A perusal of the record would show that the petitioner had filed returns for the relevant period. The subsequent inspection and audit of the accounts of the petitioner had resulted in recovery of certain computer print outs and two diaries. The details found in these computer print outs and diaries show sale of ghee to various persons, which has not been brought into the books of accounts and which had not been reported in the returns filed by the petitioner. In the circumstances, addition of the turnovers found in these documents cannot be faulted. The petitioner contends that the entries found in 1 52 STJ 147(2011) 6 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 the computer print outs are irrelevant as they were only inserted into the software package for the purpose of testing it and the said entries do not reflect any transactions, which were actually undertaken by the petitioner. This Court is not willing to accept the said explanation. In fact, this explanation did not arise during the first round of assessment and appears to have come up later. This Court does not find any reason to reject the entries made in the computer print outs. The learned Senior Counsel appearing for the petitioner had, in fact, produced a copy of the computer print outs showing various transactions said to have been carried out with different persons. In such circumstances, the burden of demonstrating that those transactions did not take place with the said persons, would be on the petitioner. However, the petitioner sought to discharge this burden by merely denying that none of the names given in the entries, in the computer print outs, relate to any living / existing person. The said denial, is not sufficient to discharge the burden of the petitioner. In the circumstances, we do not find any reason to reject the findings of the Commercial Tax Officer in the first order of assessment and the finding of the Additional Commissioner in the order of revision. 9. The contention of the petitioner that mere existence of such record is not sufficient for undertaking a best judgment assessment is also rejected. Once incriminating material has been found in the place of business of the petitioner, it would incumbent on the petitioner to demonstrate that the entries made in such incriminating material does not relate to the petitioner. That burden has not been discharged by the petitioner. In such 7 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 circumstances, it would not be necessary in the Commercial Tax Officer, to undertake any further enquiry in this regard. 10. In view of the aforesaid reasons, we do not find any ground to set aside the order of the Additional Commissioner, dated14.06.2019, the second order of assessment dated14.08.2015and the consequential penalty order dated 12.01.2021. 11. Accordingly, the writ petitions are dismissed. There shall be no order as to costs.As a sequel, pending miscellaneous applications, if any, shall stand closed. _______________________ R. RAGHUNANDAN RAO, J ___________________ HARINATH.N, J Js. 8 RRR,J & HN,J W.P.Nos.3979 & 5428/2021 HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO & HON’BLE SRI JUSTICE HARINATH. N W.P.No.3979 & 5428 of 2021 (per Hon’ble Sri Justice R. Raghunandan Rao) _____ February, 2025 Js