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

1974 (5) 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

..... as contended that the information received by the department in this case was that the assessee's total turnover was Rs. 1,39,607-0-6 from out of which he had already declared the turnover amounting to Rs. 64,169-9-9. Consequently, the Sales Tax Officer was not justified in estimating and determining his escaped turnover at Rs. 1,10,000. He could not make an estimate of the turnover and determine the petitioner's escaped turnover in excess of the difference between Rs. 1,39,607-0-6 and Rs. 64,169-9-9, i.e., Rs. 75,437-6-9. The Assistant Commissioner (Judicial) relying upon a decision of this court in the case of Pooran Mal Kapoor Chand v. Commissioner of Sales Tax, U.P. S.T.R. No. 147 of 1957 decided on 30th July, 1963. , accepted the submission made on behalf of the assessee and held that in the proceedings under section 21 of the Act the assessee could not be assessed to tax on a turnover in excess of Rs. 75,437-6-9, the amount which, according to the information received by the Sales Tax Officer, had actually escaped assessment at the time when best judgment assessment order under rule 41(5) was made. The Additional Judge (Revisions), Sales Tax, Meerut, by his order dated 8th Oc .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... judgment has been made under section 7(3), the assessing authority cannot have reasons to believe that whole or part of the dealer's turnover has escaped assessment. Once the jurisdiction to reopen assessment proceedings under section 21(1) of the U.P. Sales Tax Act accrues, the explanation to that section makes it absolutely clear that the assessing authority can in suitable cases make an assessment to the best of its judgment. In the case of Pooran Mal Kapoor Chand v. Commissioner of Sales Tax, U.P.S.T.R. No. 147 of 1957 decided on 30th July, 1963., one of the questions that had been referred to this court for opinion was: "Whether the assessment made under section 21 on the 31st October, 1949, was a valid assessment?" While dealing with this question, the learned Judges pointed out that this question did not arise out of the order of the Judge (Revisions), Sales Tax, and, as such, could not have been referred for the opinion of the court. The Bench, however, noticed the arguments advanced by the learned counsel for the assessee and made certain observations with regard to them. The observations made by the learned Judge were as follows: "Question No. (2) also was not raised .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... urt on the points sought to be raised before it. However, proceeding further, the learned judges observed that the statement of the case clearly showed that the proceedings under section 21 had been initiated because the sales tax authorities had been informed that they had under-assessed the assessee and not because any part of the assessee's turnover had escaped assessment. They, accordingly, held that the proceedings in that case were more in the nature of revising an assessment rather than bringing to tax any part of the turnover that had escaped assessment. In the circumstances, the very initiation of those proceedings was invalid. They in the passing noticed the explanation to section 21(1) which provides that nothing in that sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment, and observed that the explanation applies only to a case where the whole turnover of the assessee escapes assessment and not to a case where only a part of the turnover, which, in the circumstances, would require reassessment, escapes assessment. Since after coming to the conclusion that the very initiation of proceedings under section 21 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the turnover. We do not see why the right to make an assessment to the best of his judgment should be denied to him in such a case. Otherwise, we must hold that in proceedings under section 21 although the basis upon which that dealer supports his return is false and the material adduced by him is unreliable, the Sales Tax Officer is powerless to make an assessment to the best of his judgment. The object of section 21(1) is to empower the Sales Tax Officer to reassess the turnover of the dealer, and that object would be defeated if we give to the explanation the limited scope as suggested. It is well-settled that the language of the provision should be so construed that, if possible and without straining its language, the object of the statute should be achieved. When the explanation refers to the power of the assessing authority to make an assessment to the best of his judgment, it refers to the power exercised in assessment proceedings, and it cannot be disputed that whether the Sales Tax Officer is assessing or reassessing a dealer the proceeding, in its essential nature, is an assessment. In our view, the explanation to section 21(1) comes into play both when the turnover of a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... t has been made it might not be possible to make another best judgment (sic) where required to consider" and contended that, in the opinion of the Bench, a best judgment assessment under section 21 of the Sales Tax Act cannot be made in a case where the original assessment itself was a best judgment assessment. We find that the Bench which decided the case of Bhagat Ram Jai Narain[1969] 24 S.T.C. 287. had an occasion to deal with a similar question in the case of Footer Mal Megh Raj v. Commissioner of Sales Tax[1971] 28 S.T.C. 361., wherein it made the following observations: "If an original assessment is a best judgment in respect of a particular source, no second best judgment assessment is permissible under law under section 21 of the U.P. Sales Tax Act, 1948, on the ground that the original estimate was low. It is not possible for the department to substitute one best judgment assessment by another merely on a change of opinion and in the absence of any fresh definite material. However, if some definite material comes into the possession of the department, which warrants a higher addition to the disclosed turnover than the one originally made on best judgment basis, it is ope .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... dgment assessment in proceedings under section 21 of the Sales Tax Act even in a case where the original assessment was made on best judgment basis. In this case, even though the original assessment was made on best judgment basis, the question that there was no material before the assessing authority on the basis of which it could have reason to believe that a part of the assessee's turnover had escaped assessment has not been agitated. Accordingly, we take it that notwithstanding that the original assessment was made on the basis of best judgment, the Sales Tax Officer had ample jurisdiction to initiate and reopen proceedings under section 21(1) of the Sales Tax Act. We find that the dealer had declared his total turnover of gur and khand as Rs. 61,169-9-9 and had claimed that the entire sales had been effected through Messrs. Atma Ram Om Prakash of Muzaffarnagar. At the time of original assessment the assessee had failed to produce the accounts of the sales made by it through Messrs. Atma Ram Om Prakash. His books were rejected and his total sales were estimated at Rs. 70,000. However, subsequently, the books of Messrs. Atma Ram Om Prakash were examined and they showed that duri .....

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