9911796707
TMI Blog1972 (10) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 21. (ii) Whether the aforesaid two preliminary notices asking for the production of accounts can be taken to be notices under section 21 for the starting of the proceedings so as to warrant passing of the assessment within one year of the service thereof." The matter relates to the assessment year 1957-58. The respondent-assessee, Bhagwan Industries (P.) Ltd., carries on the business of selling atta, maida and sooji. Its business comprises various units including Venkateshwar Flour Mills, Lucknow. It was assessed on December 26, 1958, for the purpose of sales tax for the year 1957-58 under rule 41(5) of the U.P. Sales Tax Rules. The estimated turnover was determined to be Rs. 46,00,000, out of which the net turnover of Venkateshwar Flour Mills for atta, maida and sooji was estimated at Rs. 43,00,000. The assessment was ex parte and the respondent did not produce the account books. On account of food shortage the Government banned the purchase of wheat by rolling flour mills from the open market in August, 1958. The Government further fixed quota of wheat to be supplied by the Central Government for each such mill on the basis of average of grinding done in the past t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the account books during the years 1955-56 and 1958-59, it appeared that the turnover determined in the ex parte orders of the years 1956-57 and 1957-58 was estimated at a lesser amount and thus some turnover escaped assessment during each of these two years. It was, therefore, considered necessary that the actual position be ascertained from the assessee. Some information received from other Sales Tax Officers regarding the sales made by this firm during the year 1957-58 also needed verification as was done in the year 1956-57 resulting in the assessment of the firm under section 21 during that year. 3.. A notice was, therefore, issued to the firm on September 13, 1961, for the production of the account books of the year 1957-58, but the firm failed to produce the account books. Again summons were issued under rule 78 of the U.P. Sales Tax Rules to Shri Kesheo Pd. Vaid, managing director of the firm, requiring him to appear in person and to produce the account books of the firm for the years 1956-57 and 1957-58 but again neither the account books were produced nor Shri Vaid appeared in person. One application dated December 27, 1961, was, however, received from one of the directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1956-57 and 1957-58 were available. On March 19, 1963, the Sales Tax Officer made an assessment order under section 21 of the Act for the assessment year 1957-58 estimating the total net turnover for that year at Rs. 84,50,000. The amount of escaped turnover was estimated to be Rs. 38,50,000. Appeal filed by the respondent against the above order was dismissed. The respondent then went up in revision and contended that there was no material on which the Sales Tax Officer could have reason to believe that turnover had escaped assessment. The proceedings initiated under section 21 of the Act were said to be without jurisdiction. It was also urged on behalf of the respondent that notice issued on September 13, 1961, as also the memorandum dated March 13, 1962, constituted valid notices under section 21 of the Act and as the assessment had not been completed within one year of the service of those notices, the assessments were barred by limitation. The Judge (Revisions) rejected these contentions. He was, however, of the opinion that the quantum of turnover needed redetermination. At the instance of the respondent, the judge (Revisions) referred the questions reproduced at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of four years from the end of such year: Provided that where the notice under sub-section (1) has been served within such four years the assessment or reassessment to be made in pursuance of such notice may be made within one year of the date of the service of the notice even if the period of four years is thereby exceeded: Provided further that nothing contained in this section limiting the time within which any assessment or reassessment may be made shall apply to an assessment or reassessment made in consequence of, or to give effect to, any finding or direction contained in an order under section 9, 10 or 11. Explanation.-Where the assessment proceedings relating to any dealer remained stayed under the orders of any civil or other competent court, the period during which the proceedings remained so stayed shall be excluded in computing the period of limitation for assessment provided under this sub-section." Perusal of sub-section (1) of the section reproduced above shows that the assessing authority can assess or reassess a dealer to tax if such authority has reason to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reassessment under section 21 of the Act would be gone into after notice is issued to the dealer and he has been heard in the matter or given an opportunity for that purpose. The assessing authority would then decide the matter in the light of material already in its possession as well as fresh material procured as a result of the enquiry which may be considered necessary. The import of the words "reason to believe" has been examined by this court in cases arising out of proceedings under section 34 of the Indian Income-tax Act, 1922, wherein also these words were used. The aforesaid section dealt with income escaping assessment and conferred jurisdiction on the Income-tax Officer to make assessment or reassessment if he had reason to believe that income, profits or gains chargeable to income-tax had been under-assessed and that such under-assessment had occurred by reason of either omission or failure on the part of the assessee to make a return of his income or to disclose fully and truly all material facts necessary for his assessment. Certain other conditions were also necessary, but we are not concerned with them. Dealing with that section in the case of S. Narayanappa v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1955-56 the sales of atta, maida and sooji of the respondent amounted to over rupees fifty-eight lakhs. Account books of the respondent also showed that during the year 1958-59 the turnover of the respondent for sale of atta, maida and sooji amounted to over rupees seventy-five laks. The assessing authority had also material with it to show that the quota of wheat for the respondent had been fixed in August, 1958, on the basis of the average of grinding done in the past three years. There was also the additional fact that the respondent had in spite of repeated notices not produced its account books for the assessment year 1957-58. These facts, in our opinion, were germane to the formation of the belief of the assessing authority that part of the turnover of the respondent had escaped assessment to tax. It cannot be said that the above belief was not formed in good faith or was mere pretence for initiating action under section 21 of the Act. The assessing authority in the circumstances, in our opinion, acted within the ambit of its powers in initiating proceedings under section 21 of the Act. We are unable to accede to the contention of Mr. Karkhanis that as the assessment so ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
