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TMI Blog2023 (10) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... red the question relating to limitation for completion of proceedings under Section 201(1)/201(1A) of the Income Tax Act, 1961. No period of limitation was prescribed under Section 201 for exercise of power thereunder and the argument of the assessee was that if no period was prescribed, then such power could be exercised only within reasonable time and not thereafter. Several decisions were cited in support of that proposition. In those decisions, the Court had held that limitation of four years should be taken as reasonable for exercise of power under Section 201(1) / 201 (1A). An assessment under the sales tax laws relates to the period commencing from the 1st of April of a particular year till 31st of March of the next year. The usage of the phrase after completion of that year in Section 22(4) means that an assessment under that Section shall be completed only after the 31st of March of the assessment period. Any such assessment, if framed after 31.10.2017 would supersede the assessment deemed to have been made under Section 22(2) on or before 31.10.2017. This is for the reason that an assessment under Section 22(4) is one framed after enquiry in line with the principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-2009 (W.P.No.19921 of 2021 17.02.2020 Pre Assessment notice issued along with demand of reversal of input credit. Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 20.01.2021 Order passed under Section 27 of the TNVAT Act Assessment order 20.01.2021 2009-10 (W.P.No.19924 of 2021) 12.09.2019 Pre assessment notice for declarations under the CST Act along with input credit reversal under the TNVAT Act. Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 29.03.2021 Order under Section 27 of the TNVAT Act Assessment order 29.03.2021 2010-2011 (W.P.No.19926 of 2021) 01.02.2021 Pre assessment notice for declarations under the CST Act along with input credit reversal under the TNVAT Act. Deemed assessment 30.06.2012 (6 year period expires on 30.06.2018) 27.02.2021 Order under Section 27 of the TNVAT Act Assessment order 27.02.2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section under which it is passed Assessment order 01.10.2021 2011-12 (W.P.No.24645 of 2021) 29.05.2020 Notice alleging that certain transactions were not reported and proposing maximum penalty under Section 27(1)(c Deemed assessment 31.10.2012 (6 year period expires on 31.10.2018) 01.10.2021 Order does not mention section under which it is passed Assessment order 01.10.2021 2012-13 (W.P.No.24684 of 2021) 29.05.2020 Notice alleging that certain transactions were not reported and proposing maximum penalty under Section 27(1)(c) Deemed assessment 31.10.2013 (6 year period expires on 31.10.2019) 01.10.2021 Order does not mention under which it is passed Assessment order 01.10.2021 Mohan Enterprises 2014-15 (W.P.No.2735 of 2022) 15.12.2021 Proposal to redetermine taxable turnover and levy tax at 14.5% Deemed assessment 31.10.2015 (6 year peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In W.P.No.28896 of 2019, the challenge is to an order dated 18.03.2019 for the period 2011-12. The primary ground on which the proceedings are assailed is the bar of limitation. Hence, it is the contention of the petitioner that the impugned order passed under Section 27, being one of revision of assessment, ought to have been passed within six years from date of deemed assessment, being 31.10.2018. 3. The first notice for revision of assessment has itself been issued only on 24.12.2018, which is beyond the period of six years and hence, according to the petitioner, the impugned order is liable to be quashed. Per contra, it is the stand of the respondent that an order of regular assessment had been passed on 25.03.2014 and hence, the period of six years would only run from that date. For this purpose, they rely on the provisions of Section 27 of the Act. No counter affidavits have been filed in any of the other writ petitions. 4. The provisions of Section 27 provide for a period of six years from the date of assessment for revision of the assessment and the question that arises in these cases is as to the point of commencement of the six year period. According to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r had been passed on 30.09.2016 under Section 22(4) of the Act. This order was sought to be revised by a notice dated 22.02.2021, which the respondent contended was well within limitation. 9. The notice culminated in an order of revision of assessment dated 30.03.2021 that had been assailed in that writ petition. The assessee therein had argued that limitation of six years would commence from 31st of October itself and that should be taken to be the date of regular assessment. In such an event, limitation would expire on 31.10.2019 and the subsequent notice and proceedings would be held to be barred. 10. To be noted that Section 2 of the TNVAT Act had been amended in 2012 vide Amendment Act 23 of 2012 by insertion of sub-Section (4A), defining assessment to mean an assessment made or deemed to have been made under this Act including a re-assessment or revision of assessment . It had thus been the contention of the revenue that the term assessment as utilized in Section 27, would connote not just a regular assessment but also a re-assessment. Two decisions were cited by the revenue, Deputy Commissioner of Commercial Taxes Vs. H.R. Sri Ramulu, [(1977) 1 SCC 703] [(1977) 39 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have been made under the Act and includes a re- assessment or a revision of assessment. Simultaneously, a proviso was inserted to Section 22(2) to the effect that in respect of returns for the years 2006-07 to 2010-11 where assessment orders had not been passed till the date of amendment being 19.06.2012, such orders would have been deemed to have been passed on 30.06.2012. 16. The Statement of Objects and Reasons to The Tamil Nadu Value Added Tax Act 2006 (Tamil Nadu Act 42 of 2006) read thus: 10.2.4. Amendment to section 22(2) of TNVAT Act , 2006 for mak- ing provision for Deemed Assessment As per the existing provisions of sub-section (2) of section 22 of the TNVAT Act, 2006, the Assessing Authority shall accept returns sub- mitted for the year by the dealer and if the returns are accompanied by the proof of payment of tax and the documents prescribed, the Assessing Authority is required to pass an assessment order. In line with the general 21 principles of Value Added Tax wherein it is en- visaged that there will be no compulsory assessment at the end of each year, the Government decided to dispense with the existing procedure of passing an assessment order b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure was hardly ever followed. Since there is no time limit prescribed statutorily for best judgement assessment either, under section 22(4), there arose a situation where dealers were not being assessed for long years. The necessity for the deeming fiction thus arose on account of long pendency of assessment proceedings at the end of the Sales tax Department. 19. To be noted that under the amended provision there is no enquiry contemplated and the officer is required to pass an order merely accepting the returns filed by an assessee if the returns are in the prescribed form and accompanied by the prescribed documents and proof of payment of tax. If no such order had been passed, such an order would be deemed to have been passed as on the 31st of October of the succeeding year. 20. Section 22(3) provides for selection of upto 20% of the total number of assessments by the Commissioner in the prescribed manner for the purpose of detailed scrutiny regarding the correctness of the returns submitted. Such selection is for conduct of revision of assessment, whereunder necessary, on a random basis, though in terms of the prescription in this regard. The provisions are more or les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit return was due to reasons beyond the control of the applicant, cancel the assessment passed under Section 22(4) and make a fresh assessment on the basis of the return now submitted. 25. Even here, the application is to be accompanied by proof of payment of tax under the return now filed. Section 22(6)(b) provides for revision of tax, if paid in excess and Section 22(6)(c) for revision of penalty, if any imposed and collected under Section 22(5). In both instances, revision of tax and penalty, no interest is payable. 26. Section 24 provides for a special assessment of sales, where the Assessing Authority is satisfied that there has been under valuation of sales or purchases, leading to evasion of tax. Such under valuation must result on a comparison of the price adopted by that dealer with the prevailing market price of the same goods. An assessment under Section 24 may be made at any time within 6 years from the expiry of the year to which the tax relates. 27. Both provisions are extracted below: Pre 2012: 24. Assessment of sales shown in accounts at low prices.-(1) If the assessing authority is satisfied that a dealer has, with a view to evade the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it. Section 27(1)(a) deals with revision of assessment of the whole or any part of the turnover of business of a dealer and states that such revision may be made at any time within a period of 6 years from date of assessment. The phrase 6 years from date of assessment substituted the phrase 5 years from the date of assessment order by the assessing authority , with effect from 19.06.2012. 30. The main provision, both pre and post 2012 are set out below: Pre 2012: 27. Assessment of escaped turnover and wrong availment of input tax credit.-(1)(a) Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax, the assessing authority may, subject to the provisions of sub- section (3), at any time within a period of five years from the date of assessment order by the assessing authority, determine to the best of its judgment the turnover which has escaped assessment and assess the tax payable on such turnover after making such enquiry as it may consider necessary. Post 2012: 27. Assessment of escaped turnover and wrong availment of input tax credit.- (1) (a) Where, for any reason, the whole or any part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificate or any other documents with a view to support his claim of input tax credit or refund, the assessing authority shall at any time, within a period of five years from the date of order of as- sessment, reverse input tax credit availed and determine the tax due after making such an enquiry, as it may consider necessary: Provided that no order shall be passed under sub-sections (1) and (2) without giving the dealer a reasonable opportunity to show cause against such order. Post 2012: 27(2) Where, for any reason, the input tax credit has been availed wrongly or where any dealer produces false bills, vouchers, declaration certificate or any other documents with a view to support his claim of input tax credit or refund, the assessing authority shall, at any time within a period of five years from the date of order of assessment, reverse input tax credit availed and determine the tax due after making such a enquiry, as it may consider necessary: Provided that no order shall be passed under sub-sections (1) and (2) without giving the dealer a reasonable opportunity to show cause against such order. 34. Section 27(3) and the clauses thereunder provide for le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must befound out from the statutory scheme. As indicated herein before, maximum period of limitation provided for in subsection (6) of Section 11 of the Act is five years. 38. The Allahabad High Court in Mass Awash Private Limited considered the question relating to limitation for completion of proceedings under Section 201(1)/201(1A) of the Income Tax Act, 1961. No period of limitation was prescribed under Section 201 for exercise of power thereunder and the argument of the assessee was that if no period was prescribed, then such power could be exercised only within reasonable time and not thereafter. Several decisions were cited in support of that proposition. In those decisions, the Court had held that limitation of four years should be taken as reasonable for exercise of power under Section 201(1) / 201 (1A). 39. That contention was rejected citing a judgment of three judges of the Hon ble Supreme Court in Uthaman Mambeo Mahale vs. Vithal Deo (AIR 1997 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xact issue before the Court now. The decisions cited by the revenue concern the issue of whether a limitation can be implied and read into the enactment, where no such limitation is actually provided in the Statute. 43. An assessment under the sales tax laws relates to the period commencing from the 1st of April of a particular year till 31st of March of the next year. The usage of the phrase after completion of that year in Section 22(4) means that an assessment under that Section shall be completed only after the 31st of March of the assessment period. Any such assessment, if framed after 31.10.2017 would supersede the assessment deemed to have been made under Section 22(2) on or before 31.10.2017. This is for the reason that an assessment under Section 22(4) is one framed after enquiry in line with the principles of natural justice. 44. Such an assessment would have to be preferred to a deemed assessment passed under Section 22(2) deeming the returns and annexures to be in order. Likewise, even in the event a speaking order has been accepting the returns under Section 22(2), the officer may invoke section 22(4). Under Section 22(2) where the officer intends to accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision of assessment under Section 27 of the Act. If a written, speaking order is passed under Section 22(2), such order of assessment under Section 22(2) can also be a point of initiation for revision of assessment under Section 27 of the Act. If no return is submitted by the dealer for any period of the year or if the return filed is in complete or incorrect, or if not accompanied with any of the documents prescribed or proof of payments of tax, the assessing authority shall, after making such enquiry as it may consider necessary, assess the dealer to the best of his judgment, after hearing the dealer. Such an order u/s 22(4) shall be passed after the end of the year in question. This shall also constitute a valid point of initiation for initiation of revision under Section 27 of the Act. 49. Such order under Section 22(4) can be passed at any time for a period of six years which is the time already provided for passing of an order of revision of assessment under Section 27 of the Act. The periods of limitation for passing of an order under Sections 22(4) and 27, thus, in my view, co-exist and no order under Section 22(4) can be passed beyond the period of limitation as set ..... 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