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TMI Blog2014 (6) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... e of a considered opinion that there was material to form opinion that there was an escaped assessment and accordingly approval granted by the Additional Commissioner under Section 21(2) and notice under Section 21 are wholly justified and no interference is called for. - Decided against assessee. - Writ Tax No. - 1730 of 2011 - - - Dated:- 2-5-2014 - Hon'ble Rajes Kumar And Hon'ble Shashi Kant,JJ. For the Petitioner : Nikhil Agrawal, Dhruv Agrawal For the Respondent : C. S. C. ORDER (Delivered by Hon'ble Rajes Kumar, J.) By means of the present writ petition, the petitioner is challenging the order dated 8.11.2011 passed by the Additional Commissioner, Commercial Tax, Gautam Budh Nagar Zone, Gautam Budh Nagar-respondent no. 3, by which he has accorded permission, under Section 21 (2) of the U.P. Trade Tax Act (hereinafter referred to as the ( Act ), for the assessment year 2006-07, both under the U.P. Trade Tax Act and under the Central Sales Tax Act and the notice dated 17.11.2011 issued by the Joint Commissioner, Corporate Circle, Commercial Tax, Noida-respondent no.4. Heard Sri Bharat Ji Agarwal, learned Senior Counsel, assisted by Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed during the period under consideration was disclosed and has admitted that the said sales are inclusive of recorded CD. The petitioner has, however, submitted that exemption has been granted under the eligibility certificate on Optical Media Recorder (CDR). The full form of the CDR is Compact Disc Recorder. The CDR on which exemption has been granted includes, both, recorded and unrecorded CD and, therefore, exemption under Section 4-A of the Act was eligible both on the turnover of recorded and unrecorded CD. It was submitted that on the basis of eligibility certificate, the exemption has been granted, both, on the recorded and unrecorded CD, therefore, the initiation of the proceeding to disallow the exemption on the turnover of recorded CD, on account of change of opinion, is not permissible. Various documents have been submitted to substantiate the claim that Optical Media Recorder (CDR) includes, both, recorded and unrecorded CD. The Additional Commissioner, Commercial Tax, Gautam Budh Nagar Zone, Gautam Budh Nagar by a detailed order dated 8.11.2011 accorded permission for reopening of the case under Section 21 of the Act, which is being challenged in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submitted that assessing authority cannot re-read the words mentioned in the eligibility certificate and cannot question the eligibility certificate. Reliance is placed on the Division Bench decisions of this Court in the case of M/s. Kumar Fuels, Pucca Bagh, Puranaganj vs. Stae of U.P. and another, reported in 1986 UPTC 357 and M/s. Kamal Plastics and Rubber Industries, Kotdwar vs. State of U.P and others, reported in 1991 UPTC 907. Sri C.B. Tripathi, learned counsel for the respondent submitted that while examining the case for the assessment year 2007-08, it was found that the petitioner had sold, both, recorded and unrecorded CD while the turnover of recorded CD had not been disclosed in the return. In reply to the show cause notice, the petitioner admitted sale of recorded CD. Though the petitioner had sold, both, recorded and unrecorded CD, but in the return, the turnover of recorded CD had not been disclosed. The turnover of recorded CD had not been disclosed even during the course of assessment proceeding. The petitioner had disclosed turnover under the head of CDR, both, under the U.P. Trade Tax Act and under the Central Sales Tax Act. The assessing authority has all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93, judgment dated 25.11.2013 in Writ Petition No. 502 of 2008, M/s Tara Chand Nand Lal others vs. State of U.P. and others, Assistant Commissioner of Income-Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd., reported in [2007] 291 ITR 500 and Raymond Woolen Mills Limited vs. Income Tax Officer, Centre Circle XI, Range Bombay and others, reported in (2008) 14 SCC 218. Having heard learned counsel for the parties and perused the record. Section 21 of the U.P. Trade Tax Act reads as follows: Section 21. Assessment of tax on the turnover not assessed during the year. (1) If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer, for any assessment year or part thereof, has escaped assessment to tax or has been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer or tax according to law: Provided that the tax shall be charged at the rate at which it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D (Compact Disk). The turnover of recorded and unrecorded CD has not been disclosed separately in the return as well as during the course of assessment proceeding. From perusal of the assessment order, it is apparent that the petitioner has disclosed the turnover under the head CDR and on the basis of such disclosure, in the absence of otherwise material, the assessing authority has granted exemption on the basis of eligibility certificate. In the eligibility certificate, the goods mentioned were Optical Media Recorder (CDR) only. CDR means Compact Disc Recorder. During the course of assessment proceeding for the assessment year 2007-08, it was found that the petitioner was manufacturing and selling recorded CD also and the turnover of such recorded CD had not been disclosed in the return and during the course of assessment proceeding. On the basis of such material, a belief has been formed that the petitioner, though, manufactured recorded CD, but has not disclosed the turnover in the return or during the course of assessment proceeding. It has been viewed that the exemption was available only on the turnover of Compact Disc Recorder under the eligibility certificate and not on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alment practiced or fraud played by the assessee or as a result of negligence or ignorance of the Assessing Authority, in our opinion, is of no consequence., provided the action to reopen the assessment is otherwise justified and the Assessing Officer is not acting arbitrarily or in a capricious manner. The escapement of assessment contemplated under that Section may be due to various reasons. The term 'turnover has escaped assessment to tax' which includes under assessment, may as well be a result of lack of care on the part of the Assessing Officer or by reason of inadvertence on his part. Section 21 does not prohibit obtaining of information from investigation material on the record of the original assessment. The scope of that section is not circumscribed by a rider like the one that exists in Section 147 (a) of the Income Tax Act, 1961, namely, that the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that year, income chargeable to tax has escaped assessment for that year. The escapement envisaged by Section 21 of the Act for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scaped assessment, it can take action under the section. Reasonable grounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. ........... In the case of M/s Shree Bhawani Paper Mills Ltd. vs. state of U.P. and others (Supra), the Division Bench of this Court has held as follows: We do not find that Section 21 (1) necessarily refers to any new material, which may be discovered or which may have been brought to the notice of the competent authority, as a pre-condition for initiating proceeding for re-assessment. Even if the material has been disclosed at the time of assessment, if the assessing authority has reason to believe that such material having connection with assessment, was not considered, as a result of which the whole or any part of the turn over has escaped assessment to tax, or h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it was in relation to both manufacture and ancillary activities, the reason to believe for reassessment may not be doubted. There has to be application of mind by the assessing authority and the consideration of the material having co-relation with manufacture, turnover or sale, before it can be said that there is any change of opinion or re-assessment on the turnover, which has already been assessed. In the case of Assistant Commissioner of Income-Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd. (supra), the Apex Court has held as follows: Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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