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TMI Blog2006 (2) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under section 21 of the Act against the present dealer was initiated by the department, giving rise to the present revision. In the aforesaid survey at the business premises of M/s. Narendra Rerolling Mills Private Limited certain documents of the said firm were seized. Entries pertaining to the dealer-opposite party were found recorded in the account books of the said firm and in the survey seized documents. Some of the entries recorded in the seized material could not be tallied with the account books of the dealer-opposite party, consequently, the assessing authority formed a belief that the dealer-opposite party has transacted the business outside the books of account, therefore, it issued reassessment notice under section 21 of the Act. At the first instance the reassessment notice was issued on March 27, 1995 before the passing of the regular assessment order. It is apparent from the record that regular assessment order was passed on March 30, 1995 and thereafter, after affording opportunity of hearing to the dealer-opposite party, on the basis of the notice issued on March 27, 1995, the assessing officer passed the reassessment order on September 30, 1995 and assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-opposite party being Appeal No. 106 of 1996. The Deputy Commissioner (Appeals) allowed the appeal in part by reducing the tax liability to Rs. 80,000, but it rejected the contention of the dealeropposite party that there was no escapement of turnover. Still aggrieved, the dealer-opposite party preferred a second appeal numbered as 612 of 1996 which came up for consideration before the Tribunal. The Tribunal by the order under revision has allowed the appeal in toto and set aside the reassessment order dated March 13, 1996. Heard Shri Bipin Kumar Pandey, learned Standing Counsel in support of revision and Shri Kunwar Saxena, the learned counsel for the dealeropposite party. The learned Standing Counsel submitted that the Tribunal committed illegality in placing reliance upon the earlier reassessment proceedings which were dropped in pursuance of the order passed by the first appellate authority dated December 18, 1995 due to irregularity in issuance of reassessment notice. The first appellate authority while allowing the appeal of the dealer-opposite party on earlier occasion did not consider the dispute on merits. It did not examine as to whether the material so recovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under section 21 of the Act the burden lies upon the department to prove that the turnover of assessee has escaped assessment and in the present case the department has failed to do so. He, therefore, submitted that reassessment order is liable to be set aside and has been rightly set aside by the Tribunal. Malwa Vanaspati Chemical Co. Ltd. v. Commissioner of Sales Tax [1995] UPTC 987, Trilok Chand Brij Bhushan Lal v. Commissioner of Sales Tax [1996] UPTC 1236 and Commissioner of Sales Tax v. Om Prakash Agrawal [2004] 24 NTN 290 were relied upon by him. I have given careful consideration to the respective submissions of the learned counsel for the parties. The following two questions are mooted in the present revision: 1.. When very initiation of reassessment proceedings has been set aside or cancelled on the ground of irregularity in issuance of reassessment proceedings without recording any finding on the merits of the case, the reassessment proceedings can be reinitiated after issuing a valid notice under section 21 of the Act and the materials which were already in possession of the department at the time of issuance of first notice, can be utilised or not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the dealer-opposite party could not show either from the original assessment order dated March 30, 1995 passed under rule 41(8) or from the order of the Deputy Commissioner (Appeals) dated December 18, 1995 (vacating the reassessment notice), that any of the authorities had considered and discussed the material which were found in survey dated January 27, 1995 conducted by S.I.B. at the business premises of M/s. Narendra Rerolling Mills Pvt. Ltd. The Deputy Commissioner (Appeals) by means of order dated December 18, 1995, allowed the appeal of the dealer, as he found that reassessment proceedings were invalid due to irregularity in issuance of reassessment notice dated March 27, 1995. He, however, did not touch any other issue. Question that turnover of dealer has not escaped was neither gone into nor he recorded any such finding in his order dated December 18, 1995. It may be placed on record that the original assessment order dated March 30, 1995 was not annexed initially along with the revision by the department. On objection being taken, this court vide order dated March 9, 2005 directed the learned Standing Counsel to file copies of the appellate order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the position would be that of escapement of turnover. This case supports the contention of the learned Standing Counsel that the information from the report of the S.T.O. (S.I.B.) might be there in possession of the assessing officer while framing the assessment order dated March 30, 1995 but was not utilised by him due to negligence or inaction or any reason whatsoever, nonetheless it would amount to escapement of turnover. In the next case of Shyam Babu Vaishya [2005] 139 STC 397 (All); [2004] UPTC 210, this court has held that in the matters relating to reopening of assessment, action can be taken for reassessment on the basis of material already on record at the time of original assessment if escapement of assessment to tax was due to concealment by assessee or negligence and ignorance on part of the assessing officer. This also supports the stand of the department and is fully applicable to the facts of the present case. It is true that the policy of law is that there must be a point of finality in all legal proceedings. The stale issue should not be reactivated beyond a particular stage and with lapse of time must induce repose in and set at rest the judicial and quasi-jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1152. In the case of Suwa Lal Pooran Mal v. Commissioner of Sales Tax [1963] 14 STC 456 (All), it has been held that language of section 21 of the Act is wide enough to cover cases of inadvertent mistake, and it was not necessary that there should be fresh information on the basis of which an order under section 21 of the Act could be made. As discussed above, therefore, the argument of the dealer that the material being in possession of the department, while framing the regular assessment order, or while passing the first reassessment order cannot be taken into consideration in subsequent reassessment proceedings, has no substance. The above proposition of law should not be misunderstood and will not be applicable in such cases where the material has been relied upon while passing the order. A distinction in between advertent mistake or omission and change of opinion is well established. In a case where a particular point has been considered on merits, and a view is taken, it would not be a case of inadvertent mistake or omission, even if it is found that the view taken earlier was wrong. It would be case of change of opinion, but if it is not so then it would be a case of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler-opposite party could not place any material before this court to take a view other than the one taken above and hold otherwise. In the light of the binding precedents of the apex court and of Division Bench decisions referred to above, therefore, the contrary argument of the learned counsel of the assessee that the material which was very much there at the time of the framing of the original assessment order, could not be taken note of, irrespective of inadvertence or omission of the assessing officer while framing the original assessment order, is meritless and is liable to be rejected. In view of the above discussion, the finding of the Tribunal that since the earlier reassessment proceeding in pursuance of the notice dated March 27, 1995 was set aside by the first appellate authority, the fresh reassessment proceedings could not be reinitiated suffers from manifest error of law and cannot be sustained. The Tribunal has failed to draw a distinction in-between omission or inadvertent mistake and non-consideration of material, and on the other hand inference drawn on consideration of such material, which amounts change of opinion. Question No. 2 Now I take up the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by M/s. Narendra Rerolling Mills Private Limited are recorded in the account books of the dealer-opposite party. The details such as truck number in Sanket Nos. 2 and 3 and date tally with the account books of the dealer except the weight, which has been less recorded in the account books of the dealer-opposite party. The assessing officer as well as the first appellate authority have found that 201.800 tonnes of ingots were sold and not routed through the account books of the dealer-opposite party. At this stage it is also relevant to look into the reply given by the dealer-opposite party to the show-cause notice. The dealer-opposite party in reply to the show-cause notice has given absolutely no explanation about the discrepancy in his account books and that of M/s. Narendra Rerolling Mills Private Ltd. Nor it has specifically denied the business transactions with the aforesaid party. Even otherwise the business relations with the aforesaid party in the facts and circumstances of the case could not possibly be denied by it. The only explanation is that the assessing officer was satisfied with the book version of the dealer-opposite party and no adverse inference was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the entries contained in his account books are correct. However, it has been further laid down therein that the procedure required to be adopted for giving an opportunity to a person must necessarily depend on the facts and circumstances of each case, meaning thereby, it has been held that applicability of principles of natural justice depends on the facts and circumstances of each case; it is not a matter of universal application. In the above case two separate concurrent judgments one by honourable Mr. Justice Bhagwati and another by honourable Mr. Justice Fazal Ali have been delivered and they have held that the assessing officer is not debarred from relying on any material against the assessee. Justice and fair play demands that the source of information relied upon by the officer concerned must be disclosed to the assessee so that he is in a position to rebut the same and an opportunity should be given to the assessee to meet the effect of the said information. Following the aforesaid pronouncement of the Supreme Court which was given with reference to the provisions of the Kerala General Sales Tax Act, 1963, this court in the case of Commissioner of Sales Tax v. Faqir Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequences flowing from the decision. It is, therefore, not possible to say that in every case the rule of audi alteram partem requires that a particular specified procedure is to be followed. It may be that in a given case the rule of audi alteram partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the inquiry should be permitted to be cross-examined by the party affected while in some other case it may not. The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case . Thus, it follows that it is not a rule of thumb that in each and every case when a material collected from outside is sought to be relied upon, the department must necessarily produce the third party for cross-examination. Keeping the above declaration of law in mind if the order of the Tribunal is examined, it is clear that the Tribunal in the impugned order without keeping the above principles of law in mind has mechanically followed the decision relied upon by the dealer-opposite party, while allowing the appeal. In the case in hand the dealer-opposite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned Standing Counsel before this court and was perused by Sri Kunwar Saxena before the court. On perusal of the record he fairly accepted that it is difficult for him to substantiate the above observation of the Tribunal from the record. He was also unable to say as to how the aforesaid observations have crept into the order of the Tribunal. He suggested and requested the court that the judgment may not be delivered immediately after close of the hearing and that in the meantime he will contact the dealer-opposite party and obtain the instructions with regard to the aforesaid observations. Liberty to mention, if some tangible information is received, was granted but learned counsel Sri Kunwar Saxena could not produce anything to show that the aforesaid observation made by the Tribunal is based on some cogent material on record. In this fact situation, the irresistible conclusion is that the aforesaid observation made in the order of the Tribunal is factually incorrect. The order of the Tribunal is perverse and based on material, which does not form part of the record and is liable to be ignored. In view of the above observation made by the Tribunal that statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rite, is no unruly horse. When facts are admitted, an enquiry would be an empty formality. Even the principle of estoppel will apply (See Gurjeewan Garewal (Dr.) v. Dr. Sumitra Dash [2004] 5 SCC 263; [2004] SCC (L S) 747. The principles of natural justice are required to be complied with having regard to the fact situation obtaining therein. It cannot be put in a straitjacket formula. It cannot be applied in a vacuum without reference to the relevant facts and circumstances of the case. (See State of Punjab v. Jagir Singh [2004] 8 SCC 129; [2004] SCC (L S) 1109 and Karnataka State Road Transport Corporation v. S.G. Kotturappa [2005] 3 SCC 409; [2005] 2 Scale 493). In view of the above discussion, therefore, it is not a principle of universal application that whenever the department relies upon the material collected from the business premises of third party, the third party should necessarily be produced by the department for cross-examination. A distinction is to be drawn where a dealer demands or asks for production of the material and cross-examination of such party and where no such demand or request is made to produce the material in original or to crossexamine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal has not found that no show-cause notice was given and as noted above, the observation of the Tribunal that the managing director of the third party appeared before the assessing authority on March 30, 1995 or he filed the affidavit supporting the case of the dealer-opposite party is incorrect, reliance placed by it on the two judgments, namely, Malwa Vanaspati Chemical Co. Ltd. [1995] UPTC 987, Trilok Chand Brij Bhushan Lal [1996] UPTC 1236; STI 1996 (All) 117 is misplaced one. Those were the cases where the dealer requested for production of third party for the purpose of cross-examination. This is not so in the present case. The cases relied upon by the Tribunal are distinguishable on the facts. The Tribunal without noticing the distinction has blindly followed the principle of law laid down therein and has obviously committed mistake of law. The order of the Tribunal is, therefore, indefensible. Additionally the Tribunal has committed another grave error of law. Having found that the third party was not produced for cross-examination, the only course left for it was to remit the matter to the assessing officer to produce the third party and afford an opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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