9911796707
TMI Blog1996 (4) TMI 473X X X X Extracts X X X X X X X X Extracts X X X X ..... well as cotton yarn sold against form "C" and without form "C" at Rs. 47,31,460 and imposed Central sales tax at Rs. 3,32,629 (see annexure 1) which was challenged in appeal by the petitioner. The Assistant Commissioner (Judicial) by his order dated January 9, 1990 partly allowed the appeal and granted the relief to the extent of Rs. 2,86,000 by deleting the turnover of staple fibre which was assessed by the Sales Tax Officer at the rate of 10 per cent (see annexure 2). 3.. The Assistant Commissioner (Judicial) while deciding the appeal observed in the body of the judgment that the petitioner had obtained these goods during the period from June 9, 1979 to June 15, 1979 and these goods form part of the closing stock as on June 30, 1978. The Assistant Commissioner (Judicial) further held that such stock could have been sold having obtained the permission of the Textile Commissioner which was obtained only on September 12, 1979. The appellate authority, therefore, held that the goods had been transferred by way of stock transfer after having obtained the permission from the Textile Commissioner during the assessment year 1979-80. Having so found, the Assistant Commissioner (Judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (7) of section 21 of the Act pursuant to the direction of any superior authority or court legally empowered to issue such directions. The contention of Shri Bharat Ji Agrawal, in short, is that there is no basic difference in such two types of dealers, as in essence in the case of each such dealer turnover has escaped assessment and thus dealers belonging to both the classes are liable to be assessed or reassessed under section 21. It is submitted that whereas section 21(7), imposes no limitation to make assessment or reassessment for the turnover which escaped assessment and which is to be assessed pursuant to a direction of a superior authority or court, section 21(2) does not permit any assessment being made after the expiry of 4 years from the end of the year of which turnover has escaped assessment. Shri Bharat Ji Agrawal says that the mere fact that under section 21(7) a dealer is subjected to assessment or reassessment pursuant to a direction of a superior authority or court, does not create intelligible differentia to discriminate such class of dealers from the other class of dealers in whose cases escaped turnover is brought to assessment without a direction of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari materia with the second proviso to section 34(3). 10.. To appreciate the submissions of Shri Bharat Ji Agrawal, it will be apposite to rush up through the facts of the case of S.C. Prashar [1963] 49 ITR 1 (SC); AIR 1963 SC 1356. The facts are that Dwarkadas Vussonji and Permanand Odhavji carried on business in partnership in the name and style of Purshottam Laxmidas from October 28, 1935 till April 1, 1946, when Dwarkadas Vussonji died. Thereafter, Vasantsen Dwarkadas, son of Dwarkadas Vussonji and Permanand Odhavji, respondent No. 3 continued the business under the same name. On January 28, 1941 another firm under the name of Vasantsen Dwarkadas was started; its partners were Vasantsen Dwarkadas, Narandas Shivji and Nanalal Odhavji. The firm was dissolved on October, 24, 1946. For the assessment year 1942-43, the firm Vasantsen Dwarkadas filed a voluntary return of income and also applied for registration under section 26 of the Act of 1922. The registration was refused on the ground that the firm was not a genuine firm but really belonged to Dwarkadas Vussonji, the principal partner of the firm Purshottam Laxmidas. The Income-tax Officer added the income of the firm Vasants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of S.T. Desai, J. 13.. Aggrieved, the revenue appealed to the Supreme Court. Heading the Constitution Bench, His Lordship S.K. Das, J., dilating on the constitutionality of the second proviso to section 34(3) concluded, in paragraph 12 at page 1362, as follows: (Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 (SC); AIR 1963 SC 1356): "Now, I proceed to discuss the first question as to whether this proviso applies in the present case. The question has two facets: (1) whether the proviso is constitutionally valid and (2) if it is constitutionally valid, does it apply to a case where the time-limit fixed by sub-section (1) of section 34 had expired some time before April, 1, 1952, the date on which the proviso came into effect? With regard to the first facet, Chagla, C.J., has pointed out, rightly in my opinion, that the persons with regard to whom a finding or direction is given and persons with regard to whom no finding or direction is given belong really to the same category, namely, the category of persons who are liable to pay tax and have failed to pay it for one reason or another. Admittedly, persons who are liable to pay tax and have not paid it could not be proceeded ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 34 which came into effect from April 1, 1952 patently introduced an unequal treatment in respect of some out of the same class of persons. Those whose liability to pay tax was discovered by one method could be proceeded against at any time and no limitation would apply in their case, and in the case of others the limitation laid down by sub-section (1) of section 34 would apply. This in my opinion is unequal treatment which is not based on any rational ground." 14.. Disagreeing with the proposition propounded by S.T. Desai, J., that the assessees and the strangers form two different classes and that whereas the proviso to section 34(3) is unconstitutional qua strangers, the same is valid qua assessees, His Lordship S.K. Das, J., observed (in paragraph 12 at page 1363) as follows: "Desai, J., put the matter on a somewhat narrower ground. He held that so far as assessees were concerned, there might be a rational ground for distinction because the appeal proceedings, etc., might take a long time and the assessee being a party to the appeal could not complain of such delay; therefore, assessees did not occupy the same position as strangers. But the learned Judge held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution in so far as it deprives such third party of the immunity given against assessment or reassessment by the period of eight years mentioned in section 34(1)(a) and it results in prejudging the merits of the third party's case before he is even heard and that there is no reasonable basis for distinguishing such third party from any other person escaping income-tax." (underlining* by court) Here italicised. 18.. From the above reproduced contention of the respondents and from the fact matrix as stated hereinabove, it is patent that the Income-tax Officer held that the income of the firm Vasantsen Dwarkadas which was not genuine, belonged to Dwarkadas Vussonji, the father of respondent No. 1 who was the principal partner in the firm Purshottam Laxmidas. So the income of the firm Vasantsen Dwarkadas was added to the individual income of Dwarkadas Vussonji and he being the principal partner in the firm Purshottam Laxmidas, the contention was raised that the firm Purshottam Laxmidas not being a party in the appeal, could not be deprived of limitation resorting to the second proviso to section 34(3). Such contention was accepted by his Lordship Kapur, J. (in paragraph 52 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er evaders of tax, which will have any rational relation to the object of the second proviso. It is true that there may have been some kind of evidence in the proceedings under section 31 which may have satisfied the Appellate Commissioner that a person not before him had evaded tax. But then it is possible for the revenue authorities to be satisfied on equally good evidence otherwise than in the course of proceedings mentioned in the second proviso, that a person has evaded tax. I see no distinction between such a person and the person mentioned in the proviso. But such a person has the advantage of the bar of time against an assessment order concerning him as provided in the substantive part of sub-section (3). This advantage is denied to the persons mentioned in the second proviso. It seems to me that the second proviso makes a hostile discrimination against persons mentioned in it and the classification made by it is without any intelligible differentia having a rational connection with the object of the statute. I think therefore, that the second proviso to sub-section (3) of section 34, as amended by the Amending Act of 1953, in so far as it affects persons other than asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
