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TMI Blog2005 (7) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ness of potato, onion, garlic, etc., on consignment basis with their principal place of business at TR Phukan Road, Fancy Bazar, Guwahati. They are liable to pay tax on the consignment sales of onion under the Act and duly submitted their return of turnover of sales for the assessment year 1994-95. The assessing authority on verification of their books of accounts and other relevant records in support of the particulars furnished by them in their return and being satisfied therewith completed the assessment under section 17(4) of the Act vide assessment orders dated July 10, 1995, September 12, 1995, September 14, 1995 and August 22, 1995, respectively. 5.. While the matter rested at that, the Superintendent of Taxes, Unit-B revised the original orders of assessment under section 18 of the Act on the basis of a report submitted by the Accountant-General (Audit) alleging that the sale price of onion as shown in the assessment order was lower than the prevailing market price. The report was based on a survey conducted by the Deputy Director of Agriculture and/or Chambers of Commerce and was not on any independent enquiry supported by corroborative evidence. Eventually, the Superinte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Todi has argued that the tax payable under the Act being determinable on the turnover of sales actually effected by the petitioners, reopening of the assessments already made under section 17(4) of the Act on the basis of the audit objection is on the face of the records illegal and arbitrary. Being perishable in nature, the price of onion, garlic, etc., depends on many factors namely, quality, size, moisture content/water content, supply and demand and though the declared market price may be taken to be a vertical ceiling on the price, it could be sold by a dealer at a lower price depending on the condition of his stock. The report of the Agricultural Marketing Board based on the data furnished by the Chambers of Commerce, being general in nature and not relatable to the petitioners' transactions in particular during the relevant period, the same was not a germane consideration justifying reopening of their completed assessment, he urged. With reference to section 2(34) of the Act and rule 2(k) of the Assam General Sales Tax Rules, 1993 (hereinafter referred to as "the Rules"), the learned Senior Counsel argued that the petitioners having supported their transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unassailable. According to him, production of the books of accounts and other records by the assessee by itself does not amount to full and true disclosure of the particulars of the sales turnover and as in the instant case, the petitioners had omitted to disclose the prevailing market price of onion for the relevant period, it amounted to concealment of primary facts justifying reopening of the assessment. Mr. Choudhury referred to section 2(34) of the Act and rule 2(k) to contend that in determining the turnover of a dealer under the Act, the market price is a relevant factor and therefore, the assessing officer was within his authority to act on report of the Agricultural Marketing Branch prepared on the basis of the particulars furnished by the Chambers of Commerce and the Onion Dealers' Association. As the market price revealed in the said report, on a comparison with the sale price disclosed in the petitioner's return, furnished an acceptable basis for the assessing officer to believe that there had been an escapement of turnover on sales, the impugned decision cannot be faulted with. According to him, the statutory appellate authorities were justified in dismissin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies mentioned therein. The Explanation (1) to section 18 of the Act relevant in the instant case is set out hereinbelow: "Explanation (1): For the purpose of this section, production before the assessing officer of accounts books or other evidence from which material evidence could with due diligence have been discovered by the assessing officer will not necessarily amount to disclosure within the meaning of this section." "Market price" as referred to in the proviso to para (ii) of subclause (d) of clause 34 of section 2 as above, is to be determined by the assessing officer in consideration of the reasonable price prevailing in the market for such goods at that time. This is the mandate of rule 2(k) of the Rules. 15.. The mode of assessment of tax payable by a dealer under the Act is prescribed by section 17. It ordains that the amount of tax payable is ordinarily assessable separately for each year. Under section 17(2) when the return is furnished, the assessing officer, in the case of such classes of registered dealers as may be prescribed and subject to such conditions as may be prescribed may make an assessment of tax payable by a dealer on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-condition for invoking the power under section 18 of the Act is the belief of the assessing officer that the whole or any part of the turnover of a dealer has escaped assessment to tax or has not been assessed or has been assessed at a lower rate, or in granting exemption or deduction, relief had been wrongly extended or allowed in excess. In case a dealer had concealed, omitted or failed to disclose fully or truly the particulars of such turnover or had furnished incorrect or incomplete particulars of his turnover, etc., the action may be initiated within eight years from the date of the relevant year for which or part of which the assessment or reassessment is required to be made. The initiation of the process, however, has to be, in any other case within four years of the end of the relevant year for which or part of which an assessment or reassessment is required to be made. Under the said provision of the Act, the assessing officer after affording an opportunity of hearing to the dealer concerned, will conduct an enquiry and thereafter as he considers necessary, may determine to the best of his judgment, the amount of tax due from the dealer in respect of such turnover. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the dealer during the period. Therefore, applying the average wholesale price per quintal at Rs. 440.41, an amount of Rs. 1,20,618.12 was according to the audit, payable in addition by the said dealer. The audit report further mentioned that the data of the wholesale price per month was made available by the Chambers of Commerce and the Wholesale Dealers of Onion. Thus, according to the audit authorities, Rs. 440.41 was the average wholesale price per quintal of onion for the assessment year 1994-95. 21.. On a reading of the assessment orders, it is explicit that the assessing officer did not accept the average wholesale price at Rs. 440.41 as reflected in the monthly bulletin of the Agricultural Marketing Branch. In course of the enquiry, the assessing officer examined the registers of the Chambers of Commerce and the Onion Dealers' Association at Guwahati, and on a comparison of the average maximum and minimum sale price of onion reflected therein with the petitioners' wholesale price, was of the view that during the period, the petitioners had sold three categories of onion--(i) good quality, (ii) gulty (small size onion) sold below minimum rate and (iii) dagi (half d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e price of different categories of onion at the relevant point of time as furnished by the Chambers of Commerce and the Onion Dealers' Association is acceptable, in order to determine the tax liability, ascertainment of the actual sale price realised from the transactions involved is indispensable. Applying the wholesale average minimum price to the total quantity of onion sold during a particular period, may not decisively yield the correct sales turnover. The determination of turnover of a dealer by applying the wholesale average minimum price ascertained for a particular category of onion to the whole quantity thereof sold during a period would produce a figure which may not tally with the sale price realised through the actual sale transactions. The computation of turnover by applying the above formula, in my opinion therefore leaves a room for error. The exercise as above would lead to a presumptive figure in a given situation subjecting a dealer to an additional tax liability. This is more so when dealer had produced contemporaneous records in support of the sales transactions involved and acted upon for assessment sought to be reopened. The relevance of "market pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is made, it is to be presumed that the assessing authority had applied his mind to all the relevant facts and therefore, the burden of establishing that any turnover had escaped assessment to tax is on the Revenue and unless it establishes the same conclusively, no additional tax can imposed. 27. In Baijnath Biswanath [2003] 133 STC 300 (Gauhati); (1998) 2 GLR 474, dwelling on the scope of power of the Commissioner under section 20 of the Assam Finance (Sales Tax) Act, 1956 to effect a suo motu revision of any order of assessment, it was held by this Court that in the absence of any authentic material regarding sale price on the date of assessment, the Commissioner ought not to have directed a fresh assessment acting on the market information and report of the Department of Agriculture. 28.. That an audit note received by the assessing authority was not a "definite information" comprehended in section 31 of the Haryana General Sales Tax Act, 1973 which justified reassessment of tax was held by the High Court of Punjab and Haryana in Haryana Co-operative Sugar Mills Limited [1997] 107 STC 103. 29.. The contention that an assessment proceeding under section 21 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment." 33.. Applying the above test in the present setting of facts, I am of the considered opinion that the purported basis of reopening the assessment of the petitioners under section 17(4) of the Act could not have generated the belief that the petitioners' turnover pertaining to sale of onion during the assessment year in question, had escaped assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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