Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

1969 (4) TMI 98

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nts maintained by the petitioner, sales had escaped assessment, and that it was necessary to reassess the tax. By these notices the petitioner was called upon to show cause why reassessment of tax should not be made and was required to appear either personally or through representative and to produce on the date fixed the relevant accounts for the year and any other evidence that he may like to produce. From the records of proceedings of the reassessment cases, which have been produced before us, it appears that in reply to the notices the petitioner appeared and on 25th May, 1967, he filed an application before the Assistant Sales Tax Officer demanding reasons why he was being reassessed as also praying for inspection of the record. The prayer for inspection was allowed but the counsel appearing for the petitioner was not ready to take inspection and the case was adjourned to 7th June 1967. On that date, the counsel along with the petitioner appeared and stated that because of illness they could not inspect the record. They reiterated their request for disclosure of the reasons why the reassessment proceedings were started against the petitioner. The order sheet records that they .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ler shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount." Section 51 of the Act empowers the State Government generally to make rules "for carrying out the purpose of the Act". The rule-making power is also conferred in respect of particular matters one of them being "all matters which are expressly required to be prescribed under this Act". In exercise of the rule-making power, the State Government made the Madhya Pradesh General Sales Tax Rules, 1959. Rule 33, which deals with the manner of reassessment, in so far as it is relevant, reads as follows: "33. Manner of assessment, reassessment and imposition of penalty.- (1) Where-...................... (f) the sale or purchase of goods by a dealer during any period has been under-assessed or has escaped assessment or has been assessed at a lower rate or any deduction has been wrongly made therefrom within the meaning of sub-section (1) of section 19, or (g)........................... then in every such case the assessing authority shall serve on the dealer a notice (which shall as far as may be, be) in Form XVI, specifying the default, escapement or concealment, as t .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... uthorised person on the said place, date and time to be heard in this regard." 4.. It will be seen from section 19 that in terms it does not speak of any notice. It requires that before proceeding to reassess the tax in such manner as may be prescribed, the assessing authority shall give the dealer a reasonable opportunity of being heard and shall make such inquiry as he considers necessary. It also provides that reassessment can only be made if for any reason any sale or purchase of goods has been underassessed or has escaped assessment, or has been assessed at a lower rate or any deduction has been wrongly made. Rule 33 and Form XVI which provide for a notice and contents thereof must be taken to have prescribed a mode for giving the dealer a reasonable opportunity of being heard and a step in the process of reassessment. Section 19 as such does not make issue of a notice to the dealer as the foundation for exercise of jurisdiction. All that is made necessary is that the dealer shall be given a reasonable opportunity of being heard. In this background the prescribed notice and the form of notice cannot be taken to be as the basic requirement for the exercise of jurisdiction. It .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... did not object to the validity of those notices. They asked for time for submitting their explanation. The time asked for was given. Therefore, the fact that only nine days were given to them for submitting explanation could not have in any manner prejudiced them. So far as the mistake in the notice as regards the assessment year is concerned, the assessee kept silent about that circumstance till 1958. It was only when they were sure that the period of limitation prescribed by section 11A had expired, they brought that fact to the notice of the assessing authority. It is clear that the appellants were merely trying to take advantage of the mistakes that had crept into the notices. They cannot be permitted to do so......................................................... In Chatturam v. Commissioner of Income-tax, Bihar [1947] 15 I.T.R. 302; A.I.R. 1947 F.C. 32., the Federal Court held that any irregularity in issuing a notice under section 22 of the Income-tax Act, 1922, does not vitiate the proceedings; that the incometax assessment proceedings commence with the issue of the notice, but the issue or receipt of the notice is, however, not the foundation of the jurisdiction of the I .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... st judgments assessments it cannot be held that notices for reassessment could not be issued for the reason that the dealer did not maintain proper accounts which resulted in the escapement of sales from assessment. Moreover, as stated earlier, the petitioner has already appeared before the assessing authority and has been told more about the reasons for starting reassessment proceedings against him. He has also taken inspection of the record which includes the report of inspection made by the flying squad of the department and which contains more details as to why the turnover may have escaped assessment. This report appears to be the basis on which the assessing authority acted and issued the notices for reassessment. It is also possible that if requested, the assessing authority may during the course of reassessment proceedings furnish to the petitioner further particulars of the escapement of turnover and the reasons for reassessment. The question ultimately would be whether the petitioner was afforded reasonable opportunity of being heard before reassessment and whether he was prejudiced because of defects in the notices. All that we need say at this stage is that the irregula .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates