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TMI Blog1993 (8) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... rs suo motu. The assessee challenged them by filing writ petitions, which were dismissed on April 1, 1986*, with certain observations. Thereafter, the assessee filed his objections, which were not accepted by the D.C. 3.. In the show cause notice proposing to revise the assessment order for the year 1980-81, it was stated that: (i) in respect of 7 persons to whom goods were supplied, and which were claimed by the assessee as having returned by the purchasers, proper proof was not forthcoming to sustain the claim of exemption, on the ground of return of goods. The total turnover of these transactions was Rs. 3,938.38; (ii) list of inter-State purchases was not filed to ascertain correctly the taxable purchases; (iii) the list of declarations under form "C" gave the figure of Rs. 1,03,14,437.61, while the taxable purchases was shown as Rs. 1,01,94,586.02. No reason was given for the difference of Rs. 1,19,851.59; (iv) there was a difference in the working of additional tax, which came to Rs. 3,880.38. The assessee pointed out that: (i) details regarding the return of goods were available with the department, which were verified by the assessing authority; (ii) "C" form register and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of the assessee regarding "C" form survives for consideration, because, admittedly, the figures in "C" form do not tally with the purchases shown. The burden was on the assessee to explain the difference. The assessee offered a particular explanation but did not establish it. The assessee should have placed convincing material before the revisional authority that, such a difference was usual in all such transactions. The record of the case, in no way revealed any explanation for this difference and the assessment order is also silent on this aspect. The assessment order reveals the purchases' were of Rs. 1,01,94,586.02, though the records of the case, on examination clearly established that as per "C" forms, purchases were of Rs. 1,03,14,437.61, resulting in a difference of Rs. 1,19,851.59. Whether this could be a basis for the exercise of the revisional power under section 21 will be considered presently. 7.. The position regarding the year 1981-82 is identical, so far as the "C" forms, and the purchase figures are concerned. The figures disclosed by the "C" forms came to Rs. 2,33,67,743.12; but the actual purchases declared by the assessee, and accepted by the assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear from the very show cause notice (which refers to the discrepancies between two "C forms" filed for October, 1979). As to form No. 32, the assessee pointed out that it is only a piece of evidence and even without it, exemption could be claimed, provided the relevant facts are proved and in these cases the assessing authority was satisfied about the purchases having suffered tax already. Entire purchases were vouched and referred to by the assessing authority. It was also contended that "C" form register was produced which had been verified by the assessing authority. *Reported as Mahaveer Drug House v. State of Karnataka [1986] 63 STC 262 (Kar). 9.4. After referring to the respective contentions, the Deputy Commissioner concluded as follows: "The argument of the duly authorised representative with reference to the written objections, as well as the records, are concluded on the basis of form 4. I cannot agree with the contention of the advocate that form 32 is only a piece of evidence and exemption does not depend on existence or non-existence of form 32. Section 6-A of the Karnataka Sales Tax Act, 1957, casts the burden of proving that the sales effected by a dealer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her form No. 3 was filed. The Deputy Commissioner has not cared to compare this figure with that of the figure disclosed in form No. 4. We cannot uphold this approach of the revisional authority. 9.6. The Deputy Commissioner has given other reasons also for his conclusion quoted by us; the said conclusion comprises within it his discussion and is not happily worded. It has been indicated that as an alternative to form No. 32, "bill-wise" details of subsequent purchases are not forthcoming. On this, the assessing authority had stated in the order of assessment, that the assessees have "accounted correctly, the entire purchases are vouched and they have maintained strict account both for opening and closing stock. 'C' form register currently maintained". On this, the Deputy Commissioner has stated in his notice that "party-wise purchase statements filed is insufficient to the extent of billwise details, at least to substitute the evidence of the declaration in form 32 required under the provisions of the Act". In the order he does not say so, though the first appellate authority has adopted this reasoning. The Appellate Tribunal has also upheld this reasoning, as an alternative to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 21 of the Act, with which we are concerned. 11.. If the order is illegal or improper or the proceeding is irregular, the order could be revised under section 21. The relevant words are "legality or propriety of such order or as to regularity of such proceedings". Further, the vitiating element in the order or proceeding should be the "prejudice" to the interests of the Revenue. The term "propriety" is a term of wide import. It covers a very large area. In Raman & Raman Ltd. v. State of Madras AIR 1956 SC 463, the Supreme Court while considering the term used in section 64-A of the Motor Vehicles Act, observed, at page 467: "The word 'propriety' has nowhere been defined in the Act and is capable of a variety of meanings. In the Oxford English Dictionary (Volume VIII) it has been stated to mean 'fitness; appropriateness; aptitude; suitability; appropriateness to the circumstances or conditions; conformity with requirement, rule or principle rightness, correctness, justness, accuracy'." On the existing record, it is open to the authority acting under section 21, to come to a different conclusion from that of the assessing authority and in an appropriate case, the revisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make fresh orders of assessment, (C) the orders of the revising authority do not satisfy the requirements of section 21, inasmuch as, the said authority has not given a definite finding that the assessment orders are illegal, or improper or that the proceedings were irregular; (D) discrepancies between annexure "C"-figures and the purchase figures is quite common in the inter-State transactions and the explanation of the assessee has been ignored by the revising authority. 14.. Contentions "A" and "B" are to be considered together. Before proceeding further, as to contention (D) it has to be noted, only to be rejected, because, the factum of discrepancy is admitted by the assessee. In such a situation, burden is on the assessee to explain away the difference; the explanation offered by the assessee was not substantiated. Since the revising authority has remanded the matter, even now, before the assessing authority, the assessee may substantiate his explanation. The revising authority has not prohibited the assessing authority from examining the question afresh; in fact, tenor of the remand orders is, quite clear; it requires the assessing authority to enquire into this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a period of five years from the expiry of the year to which the tax relates, proceed to assess or reassess to the best of its judgment the tax payable by the dealer in respect of such turnover after issuing a notice to the dealer and after making such enquiry as it may consider necessary." Some more amendments of the years 1985 and 1988 need not be referred for the purpose of the present discussion. Whereas, initially, section 12-A was attracted when turnover (i) escaped assessment of tax or (ii) has been assessed at a lower rate than the rate at which it is assessable, after the amendment of the year 1983 (with effect from April 1, 1983), the provision was attracted when the turnover (i) escaped assessment to tax or (ii) has been under-assessed or has been assessed at a lower rate....or (iii) any deductions or exemptions have been wrongly allowed in respect of the said turnover. Section 21(1) in substance reads: "The Assistant Commissioner may of his own motion call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by Assistant Commercial Tax Officer subordinate to him for the purpose of satisfying himself as to the legalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a superior and supervisory jurisdiction unlike the jurisdiction under section 12-A; initiation of proceedings under section 21 is limited to the examination of the "record of any order passed " or "proceeding recorded". Under section 12-A the jurisdiction is not confined to the "record" of the case. To this extent there is a difference between the two jurisdictions. Further, if the examination of the record reveals any illegality, impropriety or irregularity in the proceeding, a superior officer normally should have the power to intervene and take action to safeguard the interests of the Revenue. Unlike the assessee, the Revenue has no right of appeal against an order of Assessment; this purpose is substantially met by this provision. However, unless, the illegality, impropriety or the irregularity referred to therein is not revealed by the examination of the record, but depends upon any material outside the said record, section 21 cannot be resorted to; the Revenue then has to invoke other provisions of the Act, like section 12-A. 20.. Mr. Gandhi relied on a decision of this Court in Bidar Sahakar Sakkare Karkhane Ltd. v. State of Karnataka [1985] 58 STC 65. In the said case (f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revisional power cannot be exercised in respect of a matter which falls within the power to reassess the escaped turnover. The revising authority, in other words, should not trench upon the powers which are expressly reserved to the assessing authority under section 12-A of the Act. The Deputy Commissioner, in exercise of his revisional jurisdiction, should not ignore that limitation." At page 68, the Bench observed: "It is clear from these provisions that the reason for the turnover escaping assessment is immaterial. The turnover might escape for any reason. It might be by oversight, mistake or by design. If the records reveals no application of mind by the assessing authority in respect of a part of the turnover, then, it must be deemed to have escaped assessment. It would be therefore a clear case falling within the exclusive jurisdiction of the assessing authority for reassessment, no matter whether that part of the turnover was in or outside the record of assessment. If, on the other hand, the assessing authority has applied his mind and erroneously excluded any part of the turnover, then certainly it would be a case for the revisional authority to revise the assessment." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word 'erroneous' in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word 'erroneous' in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct." The very purpose of section 21 is to ensure that the assessing authority applies his mind to relevant facts and the order made by the assessing authority is not prejudicial to the interests of the Revenue by an incomplete enquiry, etc. 22.. At any rate, ratio of the decision in Bidar Sahakar Sakkare Karkhane Ltd. [1985] 58 STC 65 (Kar) if applied liberally would take away the substantial area cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding, and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding. revisional jurisdiction, if the revising authority is satisfied that the subordinate officer has committed an illegality or impropriety in the order or irregularity in the proceeding, he cannot make or direct any further enquiry.' It was further held: 'It is, therefore, not right baldly to propound that, in passing an order in the exercise of his revisional jurisdiction, the Deputy Commissioner must, in all cases, be restricted to the record maintained by the officer subordinate to him, and can never make enquiry outside that record.' While thus explaining the scope of the revisional power, the court also indicated the limitations within which such power can be exercised, holding: 'It would not invest the revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore the limitations inherent in the exercise of those powers. For instance, the power to reassess escaped turnover is primarily vested by rule 17 in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 STC 315 (Mys) the assessment order granted certain deductions. Thereafter he issued a notice under section 12-A of the Act on the ground that it has escaped the assessment. It was contended that section 12-A was not attracted and that the subject came within the provisions of section 21. The Bench observed at page 316 thus: "..........Section 12-A empowers the assessing authority to bring to tax an escaped turnover. When the turnover was already before the assessing authority when he made the first order of assessment, the said turnover cannot be said to be an escaped turnover. In such cases, the order granting deduction or exemption has to be corrected in revision under section 21 of the Act. This Court has held in Chikanarasimhiah v. Assistant Commissioner of Commercial Taxes, Bangalore City Division, Bangalore [1971] 28 STC 98 that 'if the exemption of the turnover was improper, then the matter is not one for proceeding under section 12-A but under section 21 of the Act as stated earlier and that section 21 empowers the revisional authority to revise the orders passed by the subordinate authorities, if on examination of the record, the revisional authority is satisfied that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principle stated by the Madras High Court in F.K. Hasheeb & Co. v. State of Madras [1966] 17 STC 38 which is also referred to in another decision of the Madras High Court in East India Corporation Ltd. v. State of Madras [1973] 31 STC 330. At page 333, the Madras High Court considered the question thus: "Section 16 deals with the turnover which has escaped assessment to tax. This section covers within its ambit even cases where in respect of a turnover the assessing authority has considered the liability to tax and wrongly excluded it from tax, whether on the ground of erroneous view of the nature of the transaction or on a wrong understanding of the provisions of the Act or for any other reason. This is the view taken by this Court in Hasheeb & Co. v. State of Madras [1966] 17 STC 38 in view of certain decisions of the Supreme Court in Maharaj Kumar v. Income-tax Commissioner [1959] 35 ITR I and Maharajadhiraj Sir Kameshwar Singh v. State of Bihar [1959] 37 ITR 388. Taking this position as a jumping pad, the learned counsel for the petitioners wants to jump to the conclusion that when the Deputy Commissioner exercised his power under section 32 in respect of a turnover which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the assessing authority, but it had committed a mistake in the matter of rate of tax in that a lower rate of tax than the one at which the tax ought to have been levied had been levied." Thereafter the amendment made to section 12-A was noticed at page 21 as widening the scope of section 12-A. We have already noted the impact of this amendment and in case the petitioners' present contention is accepted a substantial part of the jurisdiction created under section 21 will be totally taken away and such a reading cannot be done of the provision in the absence of a specific restriction imposed by the statute. In State of Andhra Pradesh v. Ratna Sree Box Makers [1989] 75 STC 82 the Andhra Pradesh High Court pointed out that the concept of turnover escaping assessment and the power to assess it has to be exercised only on material de hors assessment record and not on material already considered at the time of assessment. This clearly indicates that if a different view is to be taken on the existing material on record that is a matter for the revisional authority to do so. As to the scope of the revision, the observations of the Gujarat High Court made in Additional Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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