2011 (6) TMI 717 - HC - Income Tax

Whether the respondent-authority did not take into consideration the aspect that it had no right to go beyond the date of past checking/previous checking and that what the authority was required to do is to check the situation that existed on the date of the visit, that is, on July 15, 2003? Held that - As on the last date when the checking took place prior to the checking in question, it appears that nothing wrong was found. However, in relation to the checking carried out on July 15, 2003 the authority has considered a period of more than six months prior to the date of checking, for the purpose of computation of tax, despite the fact that previous checking had taken place in relation to the said period. Thus, in the light of the above referred decisions of this court, it was clearly not permissible for the respondents to work out the entertainment tax and penalty for the period prior to the date of the previous checking. Thus the petition is partly allowed and the matter is remanded to the revisional authority for consideration of the revision, particularly the aforesaid contention and the principle laid down in the aforesaid orders of this court.

Summary

Issues:
Challenge to show-cause notice, order by Deputy Commissioner, rejection of revision application.

Analysis:
The petitioner, a registered partnership firm operating a cinema, challenged a show-cause notice, an order by the Deputy Commissioner, and the rejection of a revision application. The show-cause notice alleged irregularities during a visit on July 15, 2003, where 276 tickets were sold in the second show. The petitioner contended that the authority exceeded its jurisdiction by considering a period of more than six months prior to the visit date and assessing tax for that period. The petitioner argued that the authority should only assess the situation on the visit date and the period from the last checking to the visit date. The petitioner relied on past court decisions that emphasized the authority's limitation to assess tax for periods before the last checking. The petitioner's case was supported by the fact that no irregularities were found in the last checking before the visit in question. The Assistant Government Pleader did not contest this argument.

The court noted the petitioner's argument and previous court decisions, allowing the petition partly and remanding the matter to the revisional authority for reconsideration. The impugned order dated February 24, 2005, was quashed and set aside. The revisional authority was directed to decide the revision application expeditiously, within three months, giving the petitioner an opportunity to be heard on all grounds, including the jurisdictional issue. No costs were awarded in the matter.