2014 (7) TMI 1077 - HC - VAT and Sales Tax

Estimation based on the D3 proposal - AO adopted the sales turnover as found in D3 proposal - Even though the petitioners filed their objection to the said proposal, they have not been provided an opportunity of being heard - Held that - When the higher officer has directed the assessing officer to complete the assessment on the basis of the proposal in D3 form, the assessing officer, who is lower in rank in the hierarchy of officers, is bound by the said direction, has not independently applied his mind, but adopted the sales turnover as found in D3 proposal and also levied the penalty in the manner indicated in D3 proposal. It is well settled that the assessing officer is a quasi judicial authority and in exercising his quasi judicial function of completing the assessment, he is not bound by the instructions or directions of the higher authorities. - impugned order has been passed totally relying upon D3 proposal forwarded by the enforcement wing. Since the assessing officer acted on the basis of the direction, the impugned order is liable to be quashed. Decided in favour of assessee.

Summary

Issues:
1. Validity of the assessment order based on D3 proposal without independent verification.
2. Compliance with principles of natural justice in the assessment proceedings.
3. Quashing of the impugned order and directions for fresh assessment.

Analysis:

Issue 1: Validity of the assessment order based on D3 proposal without independent verification
The petitioner, a registered dealer under the Tamil Nadu Tax on Luxuries Act, challenged the assessment order issued by the first respondent based solely on a D3 proposal without independent verification. The petitioner contended that the assessing officer, in following the D3 proposal from the enforcement wing, failed to exercise independent judgment as required for a quasi-judicial authority. Citing legal precedent, the court emphasized that assessing officers are not bound by higher authorities' directions in completing assessments. Consequently, the court held that the impugned order, reliant solely on the D3 proposal, lacked proper assessment and was liable to be quashed.

Issue 2: Compliance with principles of natural justice in the assessment proceedings
The petitioner raised concerns regarding the lack of opportunity to be heard during the assessment proceedings. Despite filing detailed objections and providing explanations for records recovered during an inspection, the petitioner was not granted a hearing. The court noted that the respondent did not consider the objections raised by the petitioner, indicating a failure to adhere to principles of natural justice. The court highlighted the importance of providing an opportunity to present objections and be heard before making assessment decisions.

Issue 3: Quashing of the impugned order and directions for fresh assessment
Based on the above considerations, the court quashed the impugned order dated 09.10.2013 and directed the petitioner to deposit a specified amount towards arrears of tax. The court instructed the first respondent to conduct a fresh assessment in accordance with the law after receiving the payment and providing the petitioner with an opportunity to present their case. The writ petition was allowed with the given directions, and no costs were awarded. The court's decision aimed to ensure a fair assessment process and proper adherence to legal principles in tax matters.

Overall, the judgment addressed the issues related to the validity of the assessment order, compliance with principles of natural justice, and the subsequent quashing of the order with directions for a fresh assessment, emphasizing the importance of independent assessment and procedural fairness in tax matters.