9911796707
TMI Blog1977 (8) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso. 2.. The Assistant Commissioner of Sales Tax, opposite party No. 1, who had been delegated suo motu power of revision by the Commissioner as per Notification No. I.S.T. 75/63-14171 dated 3rd August, 1963, assessed the escaped turnover of Rs. 1,30,095.49 by his impugned order, annexure 2, dated 3rd March, 1976, in exercise of his revisional power under rule 80 of the Orissa Sales Tax Rules, 1947. This petition is to quash annexure 2. 3.. It is not disputed either by the petitioner or by the revenue that the impugned turnover of Rs. 1,30,095.49 has been taxed as the petitioner contravened the proviso to section 5(2)(A)(a)(ii) of the Act. The revisional authority in exercise of its power under rule 80 rendered the following findings: "(a) ......On scrutiny of the records for the year 1971-72 it was found subsequently that the appellant has transferred a portion of the goods purchased from M/s. G.E.C. of India, Cuttack branch, by furnishing declarations under section 5(2)(A)(a)(ii) of the Act to the said office at Calcutta. The assessing officer while completing the assessment for the above period had not added the said turnover to the taxable turnover, nor did he levy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der sub-section (1) of section 11 and may proceed to assess the amount of tax due from the dealer in the manner laid down in sub-section (5) of this section and may also direct, in cases where such escapement or under-assessment or composition is due to the dealer having concealed particulars of this turnover or having without sufficient cause has furnished incorrect particulars thereof, that the dealer shall pay, by way of penalty in addition to the tax assessed under this sub-section, a sum not exceeding one and a half times of the said tax so assessed." Rule 80 of the Rules, under which opposite party No. 1 has purported to act, runs as follows: "The Commissioner may of his own motion, at any time within three years from the date of passing of any order by the Assistant Sales Tax Officer or by the Sales Tax Officer and within two years from the date of passing of any order other than an appellate order by the Additional Commissioner, Deputy Commissioner or the Assistant Commissioner, as the case may be, call for the record of the proceeding in which such order was passed and revise any such order." The notification by which the Commissioner delegated his power under rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1964] 15 S.T.C. 641 at 643 (S.C.). When the contingency envisaged in the proviso occurs, the burden lies on the department to establish facts which constitute the violation of the declaration: see the case of Goswami Press v. State of Orissa[1973] 32 S.T.C. 479 at 483. A.I.R. 1968 S.C. 565. This burden has not been sought to be discharged. It is not a case of the department trying to discharge the burden before the Sales Tax Officer and failing. It may, at most, be said to be concealment of a fact by the assessee which occasioned failure of assessment of the impugned turnover. A case of escaped turnover has been explained by the Supreme Court in the case of Ghanshyamdas v. Regional Assistant Commissioner of Sales Tax, Nagpur[1963] 14 S.T.C. 976 (S.C.). , as including cases of a turnover which has not been assessed at all because for one reason or other no assessment proceedings were initiated and, therefore, no assessment was made in respect thereof. It also includes cases where due to any reason no notice was issued to the assessee and, therefore, there was no assessment of his income, and also a case of omission or deliberate concealment on the part of the assessee to submit a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs to that effect. The assessment was completed in November, 1958. The Income-tax Officer failed to include in the total income, the share of profit from Madras firm. Subsequently, in the year 1960, the Income-tax Officer issued a notice under section 34(1)(b) of the Income-tax Act, 1922, to assess the income as escaped assessment. On the above facts, their Lordships of the Supreme Court held that as the factum and existence of the income had been fully disclosed in the return filed by the assessee and with regard to that income a note had been made on the file by the Income-tax Officer when the share allocation report was received from Madras, it was a case of Income-tax Officer refusing to assess this income, though wrongly, but not a case of escaped assessment and jurisdiction under section 34(1)(b) could not be invoked. The second case is the case of Anandji Haridas Co. (P.) Ltd. v. S.P. Kushare[1968] 21 S.T.C. 326 (S.C.); , where it has been held that an income escapes assessment when the process of assessment has not been initiated at all, also, it has resulted in no assessment after completion of the process. This rather supports the petitioner's case as the impugned tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has, therefore, no power under the delegation to assess the same. On this conclusion, the impugned order (annexure 2) is liable to be quashed. 9.. Rule 80 of the Rules, even though couched in wide language, when construed in the background of the scheme of the Act, does not confer power to assess any escaped turnover. Section 12(8) of the Act confers specific power to make such assessment on the very authority who is empowered to assess a dealer under sub-section (1) of section 12. If the construction given to rule 80 by the revenue is accepted, then there would be two simultaneous authorities vested with the same identical power of taxing escaped turnover, that is, to assess a new source of income. That could not obviously be the intendment of law. Rule 80 has been framed by the State Government in exercise of rule-making power under section 29 of the Act. Sub-section (1) of section 29 gives power to the State Government to make rules for carrying out the purposes of the Act, and neither sub-section (1) nor sub-section (2) of section 29 authorises the State Government to make rules to create new jurisdiction not envisaged within the four corners of the Act. Therefore, rule 80 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner under section 31(3) of the Income-tax Act, 1922. That sub-section confers power on the Appellate Assistant Commissioner to confirm, reduce, enhance or annul the assessment, or set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax Officer thinks fit or the Appellate Assistant Commissioner may direct. This power was considered not to embrace within its scope the power to assess a new source of income, not considered by the Income-tax Officer, and such a power was held to be beyond the jurisdiction of the Appellate Assistant Commissioner. A point was raised in that case before the Supreme Court that the Income-tax Officer had noted the fact of transfer of a sum of Rs. 5,85,000 by the assessee to Forbesganj branch. Basing on that fact, it was argued that in the appeal, the Appellate Assistant Commissioner has, therefore, jurisdiction to deal with the question of taxability of that amount and to hold that it was taxable as undisclosed profits in the hands of the assessee. This argument was repelled. It was held that though the Income-tax Officer had referred to the remittance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caped assessment in any financial year or has been assessed at too low a rate, the Agricultural Income-tax Officer may, at any time within three years of the end of that year serve on the person liable to pay the tax or in the case of a company on the principal officer thereof a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 17 and may proceed to assess or reassess such income and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section: Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment, as the case may be: Provided further that the Agricultural Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so." The High Court had taken the view that in the case of escaped assessment, a special provision for such escaped assessment having been made in section 35, the Commissioner could not deal with that subject-matter in exercise of his revisional power under section 34. The Supreme Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to tax escaped turnover. Those decisions are: (a) State of Kerala v. M. Appukutty[1963] 14 S.T.C. 242 (S.C.). and (b) Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue, West Bengal(3). In the case of State of Kerala v. M. Appukutty[1963] 14 S.T.C. 242 (S.C.)., the question which was agitated was whether the Deputy Commissioner of Commercial Taxes could assess an escaped turnover under rule 17(3-A) of the Rules framed by the State Government under section 19 of the Madras General Sales Tax Act, 1939. In section 12(2) of that Act revisional power was also conferred on the Deputy Commissioner in respect of any order passed or proceeding recorded by the Commercial Tax Officer under sub-section (1) or any other provision of that Act and against which no appeal has been preferred to the Appellate Tribunal under section 12-A. This revisional power was to be exercised suo motu or on an application. Rule 17 was a specific provision for assessment of escaped turnover. Dealing with the revisional power of the Deputy Commissioner under section 12(2), their Lordships said that the power to assess escaped turnover did not arise out of the jurisdiction exercisable under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 14 S.T.C. 242 (S.C.). and Commissioner of Income-tax, Bombay v. Shapoorji Pallonji Mistry[1962] 44 I.T.R. 891 (S.C.). relied upon by Mr. Desai in support of his contention that while exercising his revisional power under section 20(3) of the Act, the Commissioner cannot travel outside the return made by the assessee and the assessment order passed by the Sales Tax Officer with a view to finding out suppressed or escaped items of turnover and enhance the assessment are distinguishable as in all those cases, there were specific and separate provisions which enabled escaped turnover or income being brought to tax after following a special procedure. In Dhanalakshmi Vilas Cashew Co.'s case(2), there was rule 33 of the Kerala General Sales Tax Rules, 1950; in M. Appukutty's case(3), there was rule 17 of the Madras General Sales Tax Rules, 1939, and, in Shapoorji Pallonji Mistry's case(4), there were sections 34 and 33B of the Income-tax Act, 1922, which enabled escaped turnover or escaped income to be brought to tax. In the Act before us, however, there are no separate or specific provisions for assessment of escaped turnover which may, by implication, be said to exclude from the ambi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
