Judgment · High Court · 2007

#8. Being aggrieved, the petitioner preferred two appeals before the Deputy Commissioner of Taxes (Appeals) i.e. the Respondent No.3. The appeals have been disposed of by order dated 21.3.1999 issued under Memo No.KDG/GST-2/99/90-92 da ted 11.4.2001. The order is reproduced below :- (cid:28) O R D E R Dated Guwahat, the 21st March, 2001. These two appeals came up for hearing in the wake of two appeal petitions filed in this office by M/S Agarwal Motor Co., Feroza Complex , Guwahati against the assessment orders of the Sr. Supdt. of Taxes, Guwahati, U nit-D in respect of the A/Y 1995-96 and A/Y 1996-97 respectively under the AGST Act. In brief, the appellant is a dealer in motor-parts and had filed his retur n and produced the books-of-accounts. The assessing officer, while completing t he assessment, had inter-alia included certain sales in both the periods which r elated to the suppressed turnover, detected earlier by the Inspector of Taxes. The appellant is aggrieved with such assessment orders. Shri B. Bhattacharjee, authorized representative of the appellant appeared at th e time of hearing and contended that the assessing officer erred in adding sales turnover of Rs.2,46,632/- in the A/Y 1995-96 and Rs.9,25,791/- in the A/Y 1996- 97 as suppressed turnovers without allowing sufficient opportunity of being hear d to the appellant. It was argued that assessing officer, while disposing of the seized case, had entirely relied on the Inspector’s report without verifying th e seized books himself and without taking the minimum proceeding to verify the a ctual facts. It has also been contended by the authorized representative that t he assessing officer had released the seized books after the appellant deposite d and advance tax amount of Rs.50,000/- and he had compounded the offence after payment of the composition money of Rs.1000/-, and as such, it was apparent tha t no tax as stated in the assessment was ever suppressed by the dealer at any st age. He pointed out that it is the general practice not to release the seized books till the evaded taxes are paid, and in the instant case, it is clear tha t the appellant was not required to deposit such tax. Shri R. Prasad, Supdt. of Taxes, Guwahati Unit-D appeared at the time of hearing and defended the action of the Assessing Officer. Heard both the sides and perused records. It appears that the Inspector of Taxes of the area had made seizure of some books of accounts, which were verified onl y by him and the assessee was asked to show cause against prosecution. The case was compounded on the assessee’s prayer on deposition of the composition money of Rs.1000/-. That apart, the dealer had deposited Rs.50,000/- as an advance tax amount in the A/Y 1996-97. It is curious to observe that the learned assessing officer did not insist on the deposition of the entire evaded tax for both the a ssessment year before actually compounding the offence and before releasing the books of accounts and this fact has given credence to the appellant’s contention that what were seized were in facxt the regular sale bills/vouchers of the deal er and not anything else. Be that as it may, as the seized books were released a lready before the completion of the assessment, it is now impossible to ascertai n any suppressed sales conclusively. Further, as the appellant had himself pray ed for composition of the offence committed in this regard, I have no means to e xamine if the suppression of taxable turnover was matter disputed by the appella nt at the relevant time. In view of my above observations, I find no materials to interfere with the two assessment orders appealed against. The orders of assessment are confirmed. Appeal fails. Inform all. (cid:29)

#9. Being aggrieved, the petitioner has preferred the instant writ petition. In Para-16 of the writ petition, the petitioner has stated that the Assessing Officer invested with the power to make assessment of tax, discharged the quasi -judicial powers and he was bound to observe the principles of natural justice in reaching his conclusion. According to the petitioner, the Respondent No.4 act ed most illegally and contrary to the principles of natural justice towards pass ing the orders of assessment relying upon the report of the Inspector of Taxes, without giving the petitioner any opportunity whatsoever to meet his case and to show that there was no fallacy in its returns filed. It has been stated by th e petitioner that the appellate authority also did not at all consider that aspe ct of the matter in passing the impugned order.

#10. Referring to Section 67 of the Act and Rule 30 of the Rules, the petitio ner has stated that as it has already paid the composition amount and the tax du e, the question of payment of any other tax, as regards the alleged search and s eizure does not arise.

#11. In Para-20 of the writ petition, the petitioner has also stated that the petitioner was neither furnished with copy of the report submitted by the Insp ector of Taxes nor the Assessing Officer pointing out to the petitioner anything about the submission of the report at the time of assessment and as such, the Assessing Officer acted arbitrarily, illegally and without jurisdiction in compl eting the assessment by relying upon the said report of the Inspector of Taxes b ehind the back of the petitioner. It has further been stated that since no opp ortunity whatsoever was granted to the petitioner to contradict his report, the impugned orders by assessment based on such alleged report is violative of the p rinciples of natural justice and administrative fairplay. Although the respondents have not filed any counter affidavit, but the 12. learned counsel appearing for them, have produced the records. I have heard Ms Nitu Hawelia, learned counsel for the petitioner as well as Mr. R. Dubey, learne d Standing Counsel, Revenue. Placing reliance on the decision of the Division B ench of this Court, reported in (1989) 2 GLR 461 (Shri Dwijendra Kumar Bhattacha rjee v. The Superintendent of Taxes, Government of Tripura, Agartala and others) , learned counsel for the petitioner has submitted that there being gross viola tion of the principles of natural justice in not pointing out the evidence reli ed upon towards passing the impugned orders of assessment, same is liable to be interferred with. Placing reliance on the same very decision, the learned counse l representing the respondents, on the other hand, has submitted that the petit ioner having been provided with due opportunity and it having been provided wit h all the required documents, the plea of the petitioner regarding violation of the principles of natural justice is not at all sustainable.

#13. Learned counsel for the petitioner, while referring to the grounds of ap peal, has submitted that she would not press Ground No.6, by which it was conte nded that no show cause notice was issued while taking up the prosecution proce eding. For a ready reference, the grounds urged in the appeal are quoted below :- (cid:28)Grounds of Appeal 1995-96

#1. For that the assessment is bad in law as well as in fact as the learned AO while compleeting assessment did not follow the minimum principles of natural justice.

#2. For that the learned SST has erred in adding a sales turnover of Rs.2, 46,632/- as suppressed turnover to the assessable turnover of sales at 1st point to others under schedule IV on the basis of a seizure report of Inspector of T ax which is ir3regular and without the sanction of law as the same is done witho ut proper verification and without giving the assessee an opportunity of being h eard.

#3. For that while disposing the seized case the learned AO has entirely re lied on the report of the IT without bothering to take up minimum proceedings t o verify the actual facts.

#4. For that the sales turnover derived by the IT from the seized documents and determination of the impugned turnover as sales turnover of goods t5axabloe at 1st point under schedule IV are not based on any valid documentary evidence .

#5. For the learned AO should have verified the facts by himself before dete rmining the same as suppressed turnover and adding same with the assessable tur nover of goods taxable at 1st point to others under Schedule IV.

#6. For that the learned SST did not issue any show cause notice to the asse ssee while taking up the prosecution proceedings which is tantamount to exparte decision.

#7. For that there were no suppression of taxable turnover as reported by t he IT as the impugned sales turnover fully within the intervening period of abol ition of schedule IV i.e. between 15.9.95 to 31.3.96.

#8. For that the sales reported by the IT are all locally purchased goods u nder schedule II which suffered tax at 1st point and these are duly recorded in the books of accounts on the basis of which the turnover is submitted.

#9. For that the learned AO’s action in determining the sales turnover of R s.2,46,632/- as suppressed turnover and adding the same with the assessable turn over is arbitrary and without the principles of natural justice and as such the assessment is illegal and bad to law. (cid:29)

#14. I have given my anxious consideration to the submissions advanced by th e learned counsel for the parties and have considered the materials on record. Although the petitioner has contended that the documents were not furnished, but the Annexure-’B’ seizure memo reflects that the seizure was made from the prop rietor of the petitioner-Company. As against the plea of the petitioner that th e report furnished by the Respondent No.5 was not furnished to it, it is found that in the grounds of appeal, no such plea was taken.

#15. It is the definite case of the petitioner that the assessment order has been passed behind its back. According to it, there is no material to arrive at such a finding. However, the records produced by the learned Standing Counsel speaks otherwise. The petitioner itself volunteered for depositing of Rs.50,000/ - as lump sum advance tax for 1996-97 and for submission of the revised return at the time of assessment, if necessary. The letter dated 7.4.1997 was written b y the petitioner to the Superintendent of Taxes in response to the show cause no tice dated 4.4.1997. The show cause notice is reproduced below :- (cid:28)To M/S Aggarwal Motor Company, AT Road, Guwahati. Sub :- Notice to show cause for prosecution. Whereas on verification of the books of accounts and documents seized by the Ins pector of Taxes on 7.1.97 it appears that the following turn over during the ass essment year 1995-96 and 1996-97 were not entered into your regular books of acc ounts. Assessment Year 1995-96 Rs.2,57,922/- 1996-97 Rs.9,75,306/- Taxable Turn over You are therefore, required to show cause in writing either by appearing perso nally or cause to appear through your authorized representative on 7.4.97 at 11 AM before the undersigned at his office as to why you will not be prosecuted in the Court of law for offence committed under the provision of Section 61 of Assa m General Sales Tax Act, 93 (cid:29)

#16. In the proceeding before the authority, there was no whisper on the part of the petitioner relating to the violation of the principles of natural justic e. This is precisely the reason as to why in the grounds of appeal, it was not contended that the petitioner was not furnished with the required documents. T he petitioner duly appeared in the proceeding. However, in the writ petition, there is no mention about the issuance of the show cause notice etc.

#17. The contention regarding application of Section 67 of the Act and Rule 3 0 of the Rules has also not been acceptable since the said provisions are not a pplicable to the facts and circumstances of the case.

#18. In the impugned order passed by the appellate authority, the above aspe cts of the matter find mention. The case was compounded on the assessee’s praye r on deposition of the composition money of Rs.1,000/-. Apart from that, the pe titioner also deposited Rs.50,000/- as advance tax. The appellate authority has observed that the Assessing Officer did not insist on the deposition of the enti re evaded tax for both the assessment years before actually compounding the offe nce and before releasing the books of accounts. As the petitioner itself pray ed for composition of the offence committed and no dispute having been raised i n respect of the allegation relating to taxable turn over, the appellate author ity has rightly rejected the appeal.

#19. The decision on which the learned counsel for the petitioner has placed reliance i.e. Shri Dwijendra Kumar Bhattacharjee (supra) is not at all applicabl e to the facts and circumstances of the case so as to extend help to the case of the petitioner. In Para-11 and 12 of the said judgment, it has been observed t hat the Assessing Officer cannot rely upon any evidence or any fact in arriving at his conclusion without first pointing out the same to the assessee and giving him reasonable opportunity of meeting the case which is sought to be made out in the assessment order. It has further been observed that the assessee has a ri ght to inspect the record and the relevant documents. In the instant case, the petitioner was issued with the show cause notice and it was provided with ample opportunity to have its say in the matter. This is precisely the reason as to why Mr. Dubey, learned Standing Counsel, Revenue has referred to Para-13 of the aforesaid judgment, which is quoted below :- (cid:28)13. The assessing officer, after making all inquiries and giving reasonable opp ortunity of hearing to the assessee, can definitely arrive at his own conclusion . However, the assessment made must have reference to some evidence or material on record. Having rejected the books of account or the evidence produced by the assessee the assessing authorities cannot act arbitrarily and on pure guess and make an assessment without reference to any evidence or any material at all. No hard and fast rule can be laid down to define the sort of material on which the assessing officer can base his assessment. It will depend on the facts of each case. In any event, the assessment order must disclose not only the reasons for rejecting the return and accounts but also the basis on which the assessment i s made. (cid:29)

#20. This is not the case of no evidence or materials on record. It is also not a case of acting arbitrarily and on pure guess. As observed in the aforesai d case, no hard and fast rules can be laid down to define the sort of material on which the Assessing Officer can base his assessment. It will depend on the facts of each case.

#21. In the assessment orders mentioned above, the accounts of the dealer and their seizure by the Inspector of Taxes and as to how the case was compounded h as been noticed. The assessment orders also mention about the show cause notice issued to the petitioner. The assessment was completed on the basis of the fin ding of fact recorded in the order, which cannot be said to be arbitrary and/or based on no evidence. It is not understood as to why the petitioner has not ment ioned anything regarding issuance of the show cause notice and its reply theret o. The aforesaid decision has also been placed to support the contention that th e petitioner was not provided with reasonable opportunity by not pointing out t he materials sought to be relied upon. The records produced by the learned Stan ding Counsel leave no manner of doubt that the petitioner got ample opportunity and had access to the documents relied upon by the assessing authority

#22. During the course of hearing, the learned counsel for the petitioner has also abandoned Ground No.6 in which it was stated that the assessing authority did not issue any show cause notice to the petitioner while taking up the pros ecution proceeding tentamounting the same to be ex parte decision. Such abandonm ent of the ground is only on production of the case records clearing revealing t he issuance of the show cause notice to the petitioner and its reply thereto.

#23. As noted above, the seizure was made in presence of the proprietor of th e petitioner-Company. Pursuant to the seizure so made, the petitioner was called and it verified the relevant records including the report of the Inspector of Taxes. There is no mention in the writ petition about the show cause notice and the reply of the petitioner thereto. Such suppression on the part of the petit ioner stares on the face of it.

#24. For all the foregoing reasons, I do not find any merit in the writ petit ion and accordingly, it is dismissed leaving the parties to bear their own cost s.