9911796707
TMI Blog2014 (6) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... he brief facts of the case are that the petitioner is a Public Limited Company, incorporated under the Companies Act, 1956 having its registered office at 43-A, Okhla Industries Estate, Phase-III, New Delhi and having its Works at A-164, Sector-80, Noida, 66 Udyog Vihar, Greater Noida, 66 SEZ Division Greater Noida, A-119, Sector-80 Noida and having its branch offices in different States. In the State of U.P. its branch office is situated at Plot C-46, Transport Nagar, Kanpur Road, Lucknow. The petitioner was registered under the provisions of the U.P. Trade Tax Act, 1948 and is now registered under the provisions of the U.P. VAT Act, 2008. The petitioner is also registered under the provisions of the Central Sales Tax Act, 1956. The petitioner is, inter alia, engaged in the manufacturing and sale of Optical Media Recorders (CDR), Floppy Disc, C.D., DVD, including recorded CD and DVD, Audio Cassettes, Video Tapes and Jewel Boxes. The unit situated at A-164, Sector-80, Noida has been granted Eligibility Certificate No. 677/111 dated 30.7.2001 under Section 4-A of the Act for exemption for a period of 15 years with effect from 31.3.2000 to 30.3.2015 from payment of tax upto Rs. 1,34, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petitioner had sold substantial quantity of recorded CD, which had not been disclosed in the return and at the time of assessment. M/s Kunal Sons Consignment Agent of Lucknow only sells recorded CD and DVD. It was also found that during the year under consideration, the petitioner had sold substantial quantity of recorded CD but such sales have neither been disclosed in the return nor have been disclosed during the course of assessment proceeding. It has been observed that under the eligibility certificate, exemption has been granted only CDR (Compact Disc Recorder) and not on the recorded CD. It has been observed that exemption on the recorded CD has been wrongly allowed resulting escaped assessment. Learned counsel for the petitioner submitted that under the eligibility certificate, exemption has been granted on Optical Media Recorder (CDR). The full form of CDR is Compact Disc Recorder, it includes, both, unrecorded and recorded CD. He submitted that there is no dispute that the Unit No. A-164, Sector-80, Noida manufactured and sold, both, recorded and unrecorded CD and the turnover of both, had been disclosed under the head, CDR, both, under the U.P. Trade Tax Act as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to examine that whether the recorded CD is covered under the eligibility certificate or not inasmuch as turnover of recorded CD has not been disclosed either in the return or during the course of assessment proceeding. He submitted that in the eligibility certificate, the manufactured goods are mentioned as Optical Media Recorder (CDR) only. The full form of the CDR is Compact Disc Recorder. This is a device on which something is to be recorded not already recorded. The word "recorder" in the eligibility certificate is very significant and connotes a device which is recordable, on which something is to be recorded or can be recorded. In the product, mentioned in the eligibility certificate, nothing can be added and nothing can be abstracted and is to be read as such. If the intention would have been to include the recorded CD also, the word "recorder" would not have been used and mentioning of CD would be sufficient. He submitted that at this stage, it is to be examined that whether there was any material on which a belief could be formed that there was a escaped assessment and whether it is a case of change of opinion. He submitted that there is sufficient material on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment. Explanation II: For the purposes of this section and of section 22, "assessing authority" means the officer or authority who passed the earlier assessment order, if any, and includes the officer or authority having jurisdiction for the time being to assess the dealer. Explanation III: Notwithstanding the issuance of notice under this sub-section, where an order of assessment or re-assessment is in existence from before the issuance of such notice it shall continue to be effective as such, until varied by an order of assessment or re-assessment made under this section in pursuance of such notice. (2) Except as otherwise provided in this section, no order of assessment or re-assessment under any provision of this Act for any assessment year shall be made after the expiration of two years from the end of such year or March 31, 1998, whichever is later; Provided that if the Commissioner on his own or on the basis of reasons recorded by the assessing authority, is satisfied that it is just and expedient so to do authorizes the assessing authority in that behalf, such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nrecorded CD. On the facts and circumstances, we are of the view that there was sufficient material on the basis of which an opinion has been formed that there was an escaped assessment. Since turnover of the recorded CD had not been disclosed separately, the assessing authority had no occasion to examine whether such recorded CD would be eligible for exemption under the eligibility certificate. This aspect of the matter has neither been examined nor any opinion has been formed. Therefore, it cannot be said that it is a case of change of opinion. Whether the disclosed turnover includes the turnover of recorded CD or not and whether recorded CD is also exempted under the eligibility certificate is a matter of investigation and adjudication which will be examined in the re-assessment proceeding. In writ jurisdiction, the Writ Court can only examine that whether there was any material on which belief of escape assessment can be formed or not. Sufficiency of material cannot be examined. On the facts stated above, we are 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, Central Circle-I, reported in 2010 UPTC, 246 on a consideration of the decisions of the Apex Court in the case of Kalyanji Mavji & Co. Vs. Commissioner of Income-Tax, West Bengal II, reported in 102 ITR, 287, Indian Eastern Newspaper Society Vs. Commissioner of Income-Tax, New Delhi, reported in 119 ITR, 996 and in the case of A.L.A. Firm Vs. Commissioner of Income Tax, reported in 189 ITR, 285, the Division Bench of this Court held as follows: "On a combined reading of the judgment of the Apex Court in Kalyanji Mavji (Supra), Indian Eastern Newspaper Society and A.L.A. Firm (Supra), would make it clear that the proposition No.4 viz., where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from enquiry or research into facts or law." still holds goods and the facts of the present case clearly indicates that certain items of income though chargeable to tax had escaped the notice of the assessing officer and no discussion of chargeability of the tax on the said items of income was made by the Assessing Officer in the order. Therefore, in the light of the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be a rational and intelligible nexus between the reasons and the belief. Such material should not be vague and indefinite, distant, remote or fat-fetched, which would in such case not warrant the formation of the belief relating to escapement of assessment of turn over. In this case, though the entire material was before the assessing authority, he did not apply his mind to it, and or has failed to consider it, on account of which the whole or any part of the turn over may have escaped assessment or has been underassessed. There can be no denial that the consumption of raw material is relevant for the purposes of determination of turn over. The assessing authority made assessment without giving any weight to it for ascertaining the turn over. The assessing authority is in such case justified in making re-assessment under Section 21 (1) of the Act. We agree with learned counsel for the petitioner, that Section 21 (1) does not permit reassessment of turnover, which after due consideration has been subjected to assessment for tax, merely because the assessing authority subsequently comes to take a different view of the matter vide Delhi Cloth and General Mills Co. Ltd. v. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)]." In the case of Raymond Woolen Mills Limited vs. Income Tax Officer, Centre Circle XI, Range Bombay and others (supra), the assessing authority in the subsequent years noticed that the assessee in the previous years, while valuing its closing stock, the elements of fiscal duty and the other direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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