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2017 (3) TMI 155 - HC - VAT and Sales TaxReassessment proceedings for assessment year 2009-10 - Rule 9(3) of the Rules - extended period of limitation - works contract on turn key basis - separate components for supply and labour work under the contracts - wrongful allowance on account of labour charges - whether reassessment permissible? - Held that: - It is settled law that the jurisdiction to initiate reassessment proceedings arises only after the assessing authority records his reason to believe that any turnover has escaped assessment Thus, not only is the belief of escapement essential but more importantly, it is necessary for the Assessing Authority to record his reason/s as to existence of the belief of such escapement - the belief of escapement has not been shown to exist on record. Mere statement that the deduction towards labour charges is allowable under Rule 9 (3) of the Rules, even if accepted to be absolute does not automatically, give rise to the necessary belief of escapement of any part of the turnover for which reassessment proceedings may be initiated. To claim jurisdiction to reassess the petitioner, the burden was solely on the assessing authority to categorically bring on record such information or material as may establish presence of the pre-condition for application of Rule 9 (3) of the Rules. In the context of reassessment proceedings initiated by the Assessing Authority, it was mandatory to record such a fact by way of a reason (based on some material or evidence) that one of the three statutory pre-condition for application of Rule 9 (3) existed - In absence of any material it was not open to the authorities to assume existence of such facts for the purpose of acquiring jurisdiction and to later, in the course of reassessment proceedings to conduct an inquiry as to its existence or otherwise. The petitioner's Assessing Authority had not fulfilled the requirement of recording a reason to believe to apply Rule 9 (3) of the Rules. The assessing authority is clearly wrong in treating it to be a mandatory rule of normal application and not a rule of exception. In absence of any fact or reason recorded to establish existence, of either three mandatory pre-conditions for applicability of Rule 9 (3) of the Rules, the Assessing Authority could never assume jurisdiction to compute the deduction on account of labour and service charges and profit thereon in accordance with Rule 9 (3). This is a clearly impermissible course and the action of the Assessing Authority is without jurisdiction. Moreover, even if Rule 9 (3) were to be applied, even then, at this stage, there is complete absence of any belief and reason or application of mind as to the amount, which in the opinion of the assessing authority has escaped assessment. Thus, the reassessment proceedings initiated at present appear to be an exercise merely to conduct an inquiry, by way of review of the original assessment order, which is clearly impermissible on account of lack of jurisdiction. Petition allowed - decided in favor of petitioner.
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