2015 (9) TMI 1514 - HC - VAT and Sales Tax

Grant of permission for reassessment - Section 21(2) of the Act - time limitation - whether the Statutory Authority has reasons, with which he is satisfied that it is just and expedient to authorize reassessment having regard to the fact that the period of limitation has run out - Held that - Section 21 of the Act provides for the power of reassessment. The reassessment is to be done normally within a period of two years. In case, where the time limit is overshot, it is open to the Commissioner (Additional Commissioner) to grant permission. Therefore, Section 21(2) of the Act provides for the power with the Additional Commissioner to permit reassessment beyond the period. The proviso to Section 21(2) of the Act provides that the Commissioner may, of his own, or on the basis of reasons recorded, if he is satisfied that it is just and expedient so to do, authorize the Assessing Authority for doing assessment or reassessment after expiry of the period, but not beyond a period of eight years, even if it involves a change of opinion. We cannot hold this to be a case, where the Authority has acted without there being any material at all or the materials are such that they cannot reveal a connection between the appellants and M/s Parmarth Iron (P) Limited, as it is a case of Sri H.M. Bhatia that records in the electronic form reveal that the sales were indeed effected by the appellants to M/s Parmarth Iron (P) Limited. These transactions, apparently, are denied by the appellants. As to the question as to what is the probative value of these materials and whether they would clearly show that the appellants had indeed made sales, which were not reflected in the Accounts and therefore, the appellant would become liable for the enhanced liability under the Tax law; these are all matters, in our view, which should be left open to the Assessing Authority. For these reasons, we also would not lay much store by the contentions of the learned Senior Counsel for the appellants that though the request was made for calling for these documents and for right to cross examination and such a request is turned down, we would think that for the said reason, we need not interfere with the order passed under Section 21 of the Act. Appeal dismissed - decided against appellant.

Issues Involved:
1. Legality of the reassessment order under Section 21(2) of the U.P. Trade Tax Act.
2. Adequacy of materials for reassessment.
3. Maintainability of writ petitions against reassessment notices.
4. Availability of alternative remedies.

Detailed Analysis:

1. Legality of the Reassessment Order under Section 21(2) of the U.P. Trade Tax Act:

The appellants challenged the reassessment order dated 23.03.2010 for the assessment year 2004-05 under the U.P. Trade Tax Act and the Central Sales Tax Act. The reassessment was initiated under Section 21(2) of the U.P. Trade Tax Act, which allows reassessment beyond the normal period of two years if the Commissioner is satisfied that it is just and expedient. The Additional Commissioner granted permission for reassessment based on materials seized during a raid by the Excise Authority at M/s Parmarth Iron (P) Limited, which indicated unreported sales by the appellants. The court upheld the legality of the reassessment order, finding that the Commissioner had valid reasons to believe reassessment was necessary.

2. Adequacy of Materials for Reassessment:

The appellants argued that there were no transactions with M/s Parmarth Iron (P) Limited and no materials were seized from their premises. They contended that the documents relied upon were from another entity and were not made available to them, nor were they allowed to cross-examine the Director whose statement was incriminatory. The court noted that the materials seized during the raid and the statement of the Director provided sufficient grounds for the Additional Commissioner to permit reassessment. The court emphasized that the probative value of these materials and their connection to the appellants should be determined by the Assessing Authority during the reassessment proceedings.

3. Maintainability of Writ Petitions Against Reassessment Notices:

The respondents argued that the writ petitions were not maintainable against reassessment notices. They cited the Supreme Court's judgment in State of U.P. vs. Anil Kumar Ramesh Chandra Glass Works, which held that writ petitions should not be entertained against show-cause notices unless they are ex facie without jurisdiction. The court agreed, stating that the appellants should pursue their remedy through the statutory appeal process provided under the Act.

4. Availability of Alternative Remedies:

The court reiterated the principle that when a statutory forum is available for redressal of grievances, a writ petition should not be entertained. The Act provides a complete machinery for assessment, reassessment, and obtaining relief against improper orders. The court emphasized that the appellants should have pursued the alternative remedy of appealing the reassessment order to the Commissioner of Income Tax (Appeals). The court also noted that similar challenges by other entities were dismissed by the Allahabad High Court, reinforcing the availability of alternative remedies.

Conclusion:

The court dismissed the appeals, affirming the view that there were sufficient materials for the Additional Commissioner to permit reassessment under Section 21(2) of the Act. The court held that the writ petitions were not maintainable and the appellants should have pursued the alternative statutory remedies available to them. The court left open the contentions regarding the reliability of the seized documents and the statement of the Director to be determined by the Assessing Authority during the reassessment proceedings.

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