9911796707
TMI Blog2017 (7) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... dit by a special team. It is different than Section 43. It operates at a different space. An assessee may have to undergo audit by a special team under Section 43AB, upon the satisfaction of the conditions required thereunder, notwithstanding such assessee not being selected under Section 43. It may have to undergo audit by a special team, even if, it is selected under Section 43. Section 43AB comes into play when the Commissioner has justifiable reasons to believe that the assessee is engaged in an activity detrimental to the State revenue. Section 142(2A) of the Act of 1961 and Section 43 of the Act of 2003 are not pari materia. Section 43 of the Act of 2003 allows a Commissioner to select on a random basis or upon information or otherwise, such percentage or such class or classes of assessees, as may be prescribed, for audit of accounts, registers of documents. The Commissioner, therefore, has to make a selection for the purpose of audit of accounts of an assessee in respect of a financial year. The vires of Section 43(1) of the Act of 2003 is not under challenge in the writ petition. Such sub-section enjoins and casts a duty upon the Commissioner to select a certain prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee prior to the selection of an assessee for audit under Section 43. He has to give an opportunity of hearing to such assessee prior to the selection. He has to pass a reasoned order as to why a particular assessee has been selected. He has referred to the notice dated October 6, 2015 issued by the Commissioner to the petitioner and submitted that, the commissioner did not give any opportunity of hearing to the petitioner prior to selecting the petitioner to undergo audit under Section 43 of the Act of 2003. The notice dated October 6, 2015 is not informed with any reason. The Commissioner had proceeded to give a post decisional hearing. Such post decisional hearing does not cure the breach of the principles of natural justice happening at the time of selection. He has referred to Section 43(5) of the Act of 2003 and submitted that, by the process of Section 43, an adverse report will get converted to an order of assessment. A selection under Section 43 is likely to result in adverse civil consequences for the assessee. Therefore, an assessee should be given a notice before the selection is made. An administrative order or a decision in matters involving civil consequences has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 43 of the Act of 2003. The following issues have arisen for consideration in the present writ petition which are as follows:- (i) Is the Commissioner acting under the provisions of Section 43(1) of the West Bengal Value Added Tax Act, 2003 obliged to give notice, an opportunity of hearing to an assessee and pass a reasoned order prior to making a selection thereunder? (ii) What, if any, reliefs are the parties entitled to? By a notice dated October 6, 2015, the petitioner was informed that it had to undergo audit of accounts and assessment under Section 43 of the Act of 2003 for the financial year 2013-2014. The petitioner is an assessee under the Act of 2003. The petitioner has undergone an audit of accounts and an assessment under Section 43 of the Act of 2003 for such financial year. Two sections of the Act of 2003 have been referred to in the submissions of the learned Advocates for the parties. They are Sections 43 and 43AB of the Act of 2003 and are as follows:- 43. Audit of accounts and assessment in certain cases.- (1) Notwithstanding anything contained in section 45, section 47 and section 49 and subject to such conditions, restrictions and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in six months from the date on which the selection is made by the Commissioner: Provided that where the Commissioner is satisfied that audit in respect of such dealer cannot be completed within six months from the date of selection, he may, upon giving the dealer an opportunity of being heard and for the reasons to be recorded in writing, extend the period for another six months: Provided further that the order of such extension shall be made within six months from the date of selection for audit and such order shall be immediately communicated to the dealer. (5) Where, from the finding contained in the report under sub-section (3), it appears to the Commissioner that in the return furnished by such registered dealer under section 32 in respect of a year or part of such year,- (a) certain sale price or part thereof, contractual transfer price or part thereof, has not been disclosed in such return, or escaped levy of tax thereon at the appropriate rate erroneously or otherwise, or (b) certain purchase price or part thereof has not been disclosed in such return, or has escaped levy of tax thereon at the appropriate rate, erroneously or otherwise, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in subsection (5), where the dealer fails to pay the tax, interest, or late fee as stated in the computation sheet attached to the 5 report, in respect of any selection made under sub-section (1) on or after the 1st day of April, 2012, drawn under sub-section (3) within one month of receipt of such report and the computation sheet, such report shall, on expiry of one month , be 6 deemed to be an order of assessment under sub-section (1) of section 46 and the computation sheet attached to the report shall be deemed to be a notice of demand upon such assessment and such amount shall be payable within fifteen days thereafter: Provided that where an amount of net tax or interest or late fee is found to have been paid in excess as mentioned in such report and computation sheet, on expiry of one month as stated above, the said computation sheet shall be deemed to be a notice of demand. 43AB. Audit by a special team.- (1) If at any stage of a proceeding initiated under the Act against a dealer, the Commissioner, having regard to the nature and complexity of the accounts, records and documents, has reasons to believe that the dealer is engaged in an activity detriment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has dealt with the scope of special audit of accounts under Section 142(2) of the Income Tax Act, 1961. It has held that, there has to be a genuine and honest attempt on the part of the Assessing Officer to understand the accounts maintained by the assessee, appreciate the entries made therein and in the event of doubt, seek explanation from the assessee. The Assessing Officer can exercise powers under Section 142(2A) of the Act of 1961. However, the opinion of such Assessing Officer acting under such provisions of law, is required to be based on objective criteria and not on the basis of subjective satisfaction. It cannot be used for the purpose of shifting the responsibility of assessment. It has gone on to say that, an administrative order or decision in matters involving civil consequences has to be made consistently with the rules of natural justice. Unless the principles of natural justice are expressly or by necessary implications excluded by a statute, the requirement of adherence thereto can be read into a provision of statute particularly when the order has adverse civil consequences for the party affected. Indian Aluminium Co. Ltd. (supra) has dealt with Section 142 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ petition. Such sub-section enjoins and casts a duty upon the Commissioner to select a certain prescribed percentage of the assessees. Such percentage may be prescribed. Therefore, in a given financial year there will be a certain percentage of assessees who will be required to undergo an audit in terms of Section 43 of the Act of 2003. The petitioner is one of such assessees undergoing an audit under Section 43 for the financial year 2013-2014. The petitioner claims that, it has a right to be heard at the time of selection process. Section 43(1) by express words has not excluded the applicability of the principles of natural justice. It can, however, stand excluded by necessary implication. Sub-section (1) of Section 43 allows the commissioner to select an assessee on random basis or upon information or otherwise. The nature of activity involved in the selection of an assessee does not create a right of being heard in favour of an assessee prior to the selection. The Commissioner, in the first place has to select an assessee. The assessee has to be selected from out of a large number of assessees as a certain percentage is required to be selected and not the entirety of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
