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TMI Blog1960 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... however, got themselves registered as dealers soon after they opened the branch at Masulipatnam. The concerned Assistant Commercial Tax Officer inspected the business premises of the assessee and checked the accounts, and found the turnover relating to their sales for the year ending March, 1959, to be Rs. 17.177-37 nP. Thereafter the dealers voluntarily filed the annual return in Form A-1 on 17th August, 1959, disclosing the turnover of Rs. 17,177-37 nP. Subsequently, the Assistant Commercial Tax Officer. Bander, who was the assessing authority, called on the assessee to produce his accounts, and, after examining them, accepted the return made by the assessee as complete and correct, and by his order dated 25th September, 1959, assessed h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 14(3), the section may usefully be extracted. "14. (1) If the assessing authority is satisfied that any return submitted under section 13 is correct and complete, he shall assess the amount of tax payable by the dealer on the basis thereof; but if the return appears to him to be incorrect or incomplete he shall, after giving the dealer a reasonable opportunity of proving the correctness and completeness of the return submitted by him and making such inquiry as he deems necessary, assess to the best of his judgment, the amount of tax due from the dealer. An assessment under this section shall be made only within a period of four years from the expiry of the year to which the assessment relates. (2) When making an assessment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that tax, if the turnover had escaped assessment or had been under-assessed or assessed at too low a rate by reason of its not being disclosed by the dealer. Provided that before issuing any direction for the payment of any penalty under sub-section (2), sub-section (3) or sub-section (4), the assessing authority shall give the dealer a reasonable opportunity to explain the omission to disclose the information, and make such inquiry as he considers necessary." The effect of this section may be summed up as follows: Under section 14(1) where the assessing authority is satisfied that the return submitted under section 13 is correct and complete, the dealer shall be assessed to the amount of the tax on that basis. If, however, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half times the amount of that tax in addition to the tax so assessed, i.e., assessed to the best of judgment. Sub-section (4) deals with a case where, for any reason, a part of the turnover of the business of the dealer has escaped assessment to tax or been under-assessed, or assessed at too low a rate. In such a case. the assessing authority may assess the tax on the turnover which has escaped assessment, and also levy a penalty not exceeding one and half time the tax. The meaning of the phrase "escaped assessment" was considered by a Full Bench of the Madras High Court in State of Madras v. Louis Dreyfus and Company Ltd. [1955] 6 S.T.C. 318 (F.B.). In considering the scope of rule 14(2) and rule 17 of the Madras General Sales Tax Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case. There is no notice from the assessing authority, nor any enquiry resulting in a best of judgment assessment. It is only after the tax was assessed on the basis of the best of judgment assessment that the penalty not exceeding one and half times that tax could be levied. The best of judgment assessment is a condition precedent, or a sine qua non for the levy of the penalty. Any other construction would not be giving effect to the words "direct the dealer to pay in addition to the tax so assessed a penalty not exceeding one and half times the amount of the tax," where a return, though submitted late, has not been rejected as being incorrect or incomplete, but was accepted by the assessing authority and the tax has been assessed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Madras v. Ibrahim Kunhi.[1956] 7 S.T.C. 617. We respectfully follow this decision and hold that, though the return had not been made within time. the assessment made on the basis of a voluntary return is an original assessment made as per section 14(1) of the Act. Such an assessment can hardly be said to be a best of judgment assessment or an assessment of the escaped turnover contemplated in section 14(4), The acceptance of the return by the assessing authority would mean by implication that it has condoned the delay in the submission of the return. In this view, we agree with the opinion of the majority members of Tribunal and hold that neither sub-section (3) nor (4) of section 14 of the Act has any application to the case. The ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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