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TMI Blog1998 (4) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... nward. The applicant claims to have appeared before the respondent No. 1 and contended that assessment for the periods concerned having been made after due verification of relevant documents and registers, there can be no further verification of such documents without invoking suo motu power of review or revision. The applicant in view of such legal position eventually did not participate in the proceeding on the dates fixed for hearing. He, however, at the instance of the respondent No. 1 submitted a list of sales made during the aforesaid period. The applicant further claims that on a wrong legal advice he gave an undertaking to produce books of accounts and documents. But later having known the true legal position that issue of such notice under section 14(1) was beyond the jurisdiction of the Inspector of concerned, the applicant filed under section 8 of the West Bengal Taxation Tribunal Act, 1987 a petition before this Tribunal; but the application was rejected on the ground of its being filed far beyond the period of limitation. Thereafter, on the date of hearing of the proceeding pursuant to such notice under section 14(1), the applicant filed one petition of objection quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latter s books of accounts for the period from 1990-91 to 1992-93 which divulged that the applicant got huge amount of scrap converted into iron and steel goods. The conversion charges, as revealed in the said manufacturing dealer s account were found to be to the tune of Rs. 20 lakhs, Rs. 64 lakhs and Rs. 79 lakhs respectively for the said three years. More such facts came to light while holding enquiry at the places of the other dealers. If such conversions were true, the goods got manufactured in the manner are liable to sales tax. It gave rise to suspicion. It, therefore, became necessary to verify if the applicant violated any provision of sales tax law. So, the Inspector of the Bureau visited the place of the applicant but the books of accounts were not produced for his inspection. This necessitated the issue of notice dated October 7, 1994 under section 14(1) of the 1941 Act directing the applicant to produce books of accounts for the relevant period. The applicant appeared before the Inspector but instead of producing the books of accounts took adjournments from time to time. He even moved an application before this Tribunal against the notice but the application was rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention is that unless a review or a revision proceeding is already pending before the competent authority, there can be no question of production of the relevant books of accounts. In support of his contention Mr. Bhattacharyya has relied on decisions reported in [1986] 162 ITR 331 (Bom) (Jamnadas Madhavji and Co. v. J.B. Panchal, Incometax Officer) and in [1993] 204 ITR 454 (Cal) (Income-tax Officer v. James Joseph O Gorman). But considering the context in which the decisions were made we find that the case before us is quite distinguishable. Both the reported cases are under the Income-tax Act, 1961 (in short, the 1961 Act ). In the first case, the assessee submitted its income-tax return for 1972-73, 1973-74 and 1974-75. The assessment orders for the first two years were passed in March and April, 1975 and the assessment for the third year became barred by limitation in March, 1977. Subsequently, the Income-tax Officer (ITO) served summons under section 131 of the 1961 Act, calling upon the assessee to furnish information, documents and books of accounts in respect of the previous years relevant to the period for which assessments had already been made. The assessee challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to stock of goods of, or purchases, sales or deliveries of goods by, the person or relating to any other matter, as may be deemed necessary for the purposes of this Act. This provision is more comprehensive in nature than sub-sections (1) and (2) of section 131 of the 1961 Act. The Commissioner may exercise the power under section 14 for the purposes of the 1941 Act as may be deemed necessary . The scope is, thus, extended to any of the purpose enumerated in the Act. There is no reason why it cannot be resorted to at a stage prior to initiation of a proceeding under section 11E(2) or section 20(3)(a). It is more in keeping with the reasons that in view of the absence of any prohibition such production of books of accounts, in an appropriate circumstances, may be asked for. Under section 20(3)(a) the Commissioner may suo motu revise any assessment. Again, under section 11E(2) when the Commissioner is satisfied on information or otherwise about any concealment of sales or particulars thereof or about furnishing of incorrect statement in the return causing reduction of tax, he can reopen the assessment. It can hardly be over-emphasised that Commissioner or the delegated autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove mentioned reported decision of the Allahabad High Court almost an identical principle has been laid down by the Calcutta High Court in the case of Prahladrai Agarwalla v. Income-tax Officer [1973] 87 ITR 655. We quote below a relevant extract of the observation: The correct position seems to me that the Income-tax-Officers in particular cases have the right and indeed the duty to investigate. Such investigations might be done from all sources including the assessee. He cannot, however, in my opinion, compel the assessee to produce any evidence before a notice under section 148 has been issued................. I am of the opinion that there is no power on the part of the Income-tax Officer to compel the assessee to produce the particulars or to ask him to show cause why the assessment should not be reopened. 11.. Thus, the legal position, as enunciated in the above two reported cases, is in substance that even under the Income-tax Act when there is any information received by the ITO about escaped assessment, he can and should enquire into the matter in order to be satisfied that there are justification for initiating a proceeding under section 147 of the Act by issue of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Mr. Bhattacharyya has failed to enlighten us if under the Assam Act an Inspector can reopen an assessment. Under the Bengal Act (the 1941 Act) an Inspector can neither make assessment nor reopen it. Under the Bengal Act a preliminary enquiry on an information collected from documents maintained in course of business by other dealers cannot by itself amount to reopening of assessment. Secondly, Mr. Anindya Mitra, the learned Advocate for the respondents, has drawn our attention to a Supreme Court decision reported in [1976] 38 STC 1; AIR 1976 SC 1545 (Ram Kanai Jamini Ranjan Pal Pvt. Ltd. v. Member, Board of Revenue) wherein a principle in that regard has already been laid down in the context of section 14(1) of the 1941 Act itself and we are to go by that. We reproduce below the relevant part of the observation of the Supreme Court: A combined reading of the provisions of section 20(3) of the Act and rule 80A of the Rules would show that the Commissioner, Commercial Taxes, is empowered to make or cause to be made such enquiry as he may think fit for proper exercise of the revisional jurisdiction conferred on him under section 20(3) of the Act. It would be further noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, there is no ground to hold that issue of notice under section 14(1) by the Inspector was invalid on the ground of absence of pendency of any revision proceeding. As already pointed out by us under section 19A, the Bureau can after enquiry send report to the Commissioner or to the delegated authority for doing the needful or can reassess the applicant under section 19A(5). 14.. Mr. Bhattacharyya has next questioned the legality of the notice under section 14(1) on the ground of its proximate consequence. He submits that the notice is intended to enquire into certain alleged suppression of sales and if eventually the Bureau holds that there was escaped assessment and sends report accordingly leading the Commissioner or the delegated authority to reopen the assessment on such report, such authority will in effect take into consideration external material which was not before the original assessing authority. According to him, the suo motu revision under section 20(3) in respect of assessment under section 11(1) may be kept within the confines of the materials as were made available to the original assessing authority and not beyond the same. The contention is not at all con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No. 1, an Inspector, cannot arise because assessment cannot be done by any Officer below the rank of a C.T.O. 16.. Mr. Bhattacharyya has pointed out that power under section 14(1) can be exercised only subject to such conditions as may be prescribed . He argues that since no Rules have been framed prescribing the conditions, the exercise of power under the section will be arbitrary and uncanalised and for that matter, the section is ultra vires the Constitution. But this contention is demonstrably wrong as we shall see now. Firstly, it is incorrect to say that no rule has been framed prescribing any condition. Rule 68 provides certain conditions. It casts upon the authority issuing the notice under section 14(1), demanding production of books of accounts, etc., a duty to see that in requiring such production the strict regard is given to the necessity of non-disturbing the business of the dealer or the work of his staff any more than necessary. It also demands that these requisitions should be restricted to the purpose of ascertaining the required information. In other words, the authority must proceed with some specific purpose which should be very much discernible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber has stated the facts of the case and considered the points argued by the parties in detail. Hence, I am not reiterating the same. The impugned provision of sub-section (1) of section 14 of 1941 Act has already been reproduced in the judgment of my learned brother. There are two expressions in that provision which have been interpreted. The first expression is- subject to such conditions as may be prescribed . It has been shown that conditions have been actually prescribed. Apart from that, section 14(1) is not such a statutory provision which cannot be implemented or the powers under it cannot be exercised in the absence of prescription of rules. Section 14(1) stands on its own, and the power conferred under it can be fully and properly exercised without the aid of any rule. The second expression is- as may be deemed necessary for the purposes of this Act . The contention that the said expression means that a notice could be issued only in course of a proceeding under the Act, cannot be accepted at all. Had the Legislature intended to mean so, it might use a different language. For example, the Legislature while enacting section 20A(1) of 1941 Act, clearly laid down that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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