TMI Blog1981 (12) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... Commercial Tax Officer (OFA), Visakhapatnam, issued a show cause notice why a turnover of Rs. 7,89,385.01 representing sales made by the petitioner-dealer at Hyderabad during the year 1972-73, which had escaped assessment, should not be treated as a turnover liable to tax. The assessee submitted his representation on 28th February, 1976, against the proposed additional assessment. The Commercial Tax Officer, however, proceeded to pass an order of additional assessment on 19th March, 1976, levying a tax of Rs. 23,681.55 on the escaped turnover of Rs. 7,89,385.01 as proposed in the show cause notice. He also later issued a notice on 20th March, 1976, requiring the petitioner to show cause why a sum of Rs. 1,18,406.75 (representing five times the tax leviable) should not be levied by way of penalty for the alleged wilful suppression of the turnover of Rs. 7,89,385.01. By his order dated 21st May, 1976, he levied the penalty proposed. The assessee preferred appeals against the additional assessment order and the penalty imposed against him, and the same were dismissed by the Assistant Commissioner (CT), Kakinada, by an order dated 24th March, 1977. The assessee carried the matters in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment would be within time and so long as those proceedings are within time, the Commercial Tax Officer is competent not only to include the escaped turnover of Rs. 7,89,385.01 mentioned in the notice first issued under section 14(4) but also to include the additional turnover of Rs. 53,08,954.83, which was found to have been incorrectly exempted under the assessment order dated 10th March, 1975. To appreciate these respective contentions, it is necessary to bear in mind that an assessment under section 14(1) is required to be made "only within a period of four years from the expiry of the year to which the assessment relates". The assessment in question relates to the year 1972-73 ending with 31st March, 1973. The assessment under section 14(1) has, therefore, to be made on or before 31st March, 1977. Where the whole or any part of the turnover of a dealer has escaped assessment to tax or has been under-assessed, the assessing authority is given the power under sub-section (4) of section 14 to determine to the best of his judgment, the turnover that has escaped assessment and assess the turnover so determined and assess the correct amount of tax payable on the turnover that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment made under sub-section (4) of section 14 has to be computed, as laid down in that sub-section, from the date on which any order of assessment or levy was served on the dealer. In the instant case, it is common ground that the original order of assessment under section 14(1) was served on the petitioner on 12th March, 1975. Any proceeding under section 14(4), if, in view of sub-section (4-A) of section 14, it has to be made within a period of four years, it should have been made before 12th March, 1979. The impugned notice is, however, dated 29th August, 1979, which is beyond the period of four years. Viewed in this light, there cannot be two opinions that this notice is barred by time prescribed under sub-section (4-A) of section 14. However, the fact remains that proceedings under sub-section (4) of section 14 were initiated by the respondent in respect of the assessment under section 14(1) which was made on 10th March, 1975, within a period of four years. Inasmuch as the first show cause notice under section 14(4) was issued on 12th January, 1976, and served on the assessee on 20th January, 1976, the proceedings under section 14(4) under the said notice proposing to bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-section (4) of section 14 were initiated within four years of the date of the original assessment under section 14(1) which was made on 10th March, 1975, can still be completed for the period for completion of the proceedings, would be not only four years from the date of the Commercial Tax Officer's order dated 19th March, 1976, but also the additional period of nearly 2 years 4 months intervening the date of the said order and the order of the Appellate Tribunal dated 14th July, 1978, setting aside the assessment order. Inasmuch as sub-section (7) of section 14 directs that in computing the period of four years within which the assessment under sub-section (4) of section 14 has to be completed, the period between the date of such assessment and the date on which it has been set aside should be excluded. The petitioner-dealer cannot contend that the Commercial Tax Officer is not competent to bring the turnover of Rs. 7,89,385.01 which had allegedly escaped assessment to tax on the ground that it was barred by limitation. The notice dated 3rd July, 1979, or the impugned notice dated 29th August, 1979, cannot be said to be either without jurisdiction or barred by time. This p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... narayana, the learned Government Pleader, invited our attention to a judgment of this Court reported in Andhra Steel Corporation Ltd. v. State of A.P. [1981] 47 STC 13. That was a case arising under section 14(1) of the Act and the questions that came up for consideration were whether in respect of the assessment year 1962-63 a dealer, who was assessed to tax by the Commercial Tax Officer on 31st March, 1964, could be assessed to tax in pursuance of the remand order made by the appellate authority dated 16th November, 1973, and whether the assessment so made on 26th August, 1976, was valid. The court held that the entire period spent from 31st March, 1964, to 16th November 1973, the date on which the assessment order dated 31st March, 1984, was finally set aside, was to be excluded under sub-section (7) of section 14 in computing the period of four years prescribed by the Act. That was not a case relating to an assessment of escaped turnover covered by sub-section (4) of section 14. Further, the question now before us is whether in such a proceeding, a turnover, which was not sought to be brought to tax in a proceeding under subsection (4) of section 14, could be brought to tax und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated afresh as a result of an assessment order being set aside by any court or other competent authority. Sub-section (7) can be availed only when an assessment made has been set aside by any court or other competent authority and not otherwise." The turnover of Rs. 53,08,954.83, in the instant case, is sought to be included not as a consequence of the appellate order or as a consequence of the discovery of the escaped turnover within a period of four years. But it is an amount which is sought to be brought to tax for the first time after the period of four years to which sub-section (7) of section 14 has no application. The contention of the learned Government Pleader that since a proceeding under section 14(4) is pending, this additional turnover also could be included in the said proceeding ignores the fact that any proceeding under sub-section (4) of section 14 has to be preceded by a notice to the dealer and the proceeding so initiated has to be completed by way of an additional turnover within a period of four years from the date on which the order of assessment was served. In this case no proceeding in respect of this turnover of Rs. 53,08,954.83, was initiated u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er notice. The power to issue a notice under sub-section (4) of section 14 in respect of turnovers which have escaped assessment may not be exhausted until the period of four years from the date of service of the original order of assessment on the dealer under section 14. When once that period of four years expires, we do not see how, by resorting to sub-section (7) of section 14, such a turnover could be proposed to be brought to tax. In respect of a proceeding initiated within a period of four years, there was a remand order by the Appellate Tribunal. All that sub-section (7) enables the Commercial Tax Officer is to complete the assessment under subsection (4) of section 14 within a period of four years from the date of the service of the original order on the dealer and in computing the period of four years, the period between the date of his assessment order under section 14(4) and the date on which that order was set aside may be excluded. It is necessary to note that sub-section (7) of section 14 lays emphasis on the words "when an assessment order is set aside". It is only then that the question of excluding the period spent between the date of that assessment order and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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