TMI Blog1997 (1) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... /payable as Sales tax, Excise duty, Customs duty etc. which is disputed and the present stage of litigation in that regard." Though the information was not given in the style in which it was asked for by the Assessing Officer, the assessee gave the following details:-- "(i) Details of sales tax payable as at31-8-1977-- Annexure 46. (ii) Copy of the Ledger Account of Haryana Sales tax showing each and every collection and payment to the Sales tax Department from1-9-1976to31-8-1977-- Annexure 46/1. (iii) Copy of the Ledger Account of Central Sales tax showing individually each and every collection and deposit with the Department from1-9-1976to31-8-1977-- Annexure 46/2. (iv) Copy of the Ledger Account of the Sales taxJammufrom1-9-1976to31-8-1977-- Annexure 46/3. (v) Copy of the Sales tax Account of Punjab showing balance brought forward from last year and not other transactions -- Annexure 46/4. (vi) Copy of audited Balance Sheet disclosing the total amount of Rs.5,85,908.29 under the head sales tax payable along with the break up of this amount. (vii) During the hearing of the case the learned Assessing Officer had asked for a copy of the Ledger Account of Haryana Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of the Sales Tax and Central Sales Tax accounts, in which the impugned excess collection was credited as appearing in the books of accounts of the company. (ii) Complete details and year wise break up of Sales Tax suspense of Rs.2,05,479. In this break up, it was clearly disclosed as to how this excess amount was collected by the company. (iii) Sales Tax and Central Sales Tax assessment orders for the year ended on31-3-1977and31-3-1978were produced for perusal." It was further stated by the assessee that the above information and papers furnished by the assessee clearly brought out the precise nature of excess collection which was known to the assessing authority when de novo assessment was made vide order dated 29-11-1984 for assessment year 1979-80, that the assessing authority after full application of mind to the above information, did not think it fit to make any addition on account of the excess collections and that it was, therefore, incorrect to say that the assessee-company failed to disclose fully and truly all material facts for the assessment year 1979-80. 4. The assessee had collected sales tax in excess by charging the same on sale price including excise du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue disclosure of all material facts necessary for assessment. The assessee is not required to inform the Assessing Officer as to what legal inference should be drawn from the facts disclosed by him nor to advise him on questions of law. See Calcutta Discount Co. Ltd v. ITO [1961] 41 ITR 191 (SC) in the case of Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC), their Lordships of the Supreme Court held that in the proceedings of original assessment of the assessee, though the assessee did not disclose certain transactions evidenced by certain drafts the Income-tax Officer himself discovered the fact relating thereto but by oversight did not bring the amount represented by the drafts to tax as income of the assessee. The reopening of the assessment under section 147(a) was held to be not justified. The Supreme Court also held that after the discovery of the primary facts relating to the transaction evidenced by the drafts it was for the officer to make necessary enquiries and draw proper inference as to whether the amounts represented by the drafts could be treated as part of the total income of the assessee. This the officer did not do. It was clearly a case of oversight and it co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the income-tax assessment as income from undisclosed sources which was upheld by the Tribunal. In miscellaneous petition, the assessee claimed that if the amount was taxable, the equivalent amount should have been allowed as a deduction based on the decision of the Supreme Court in the case of Piara Singh 124 ITR 40. The Tribunal rejected the petition on the ground. that it was not claimed at the time of original hearing. The assessee filed Special Leave Petitions before the Supreme Court. The Supreme Court, dismissing the petitions, held: "It was possible to take the view that the question whether an amount was business loss, even assuming that it was income, was substantially different from the question whether the amount was income, and was not merely an aspect of the same question. Considerations which went into the determination of whether an amount should be treated as income and the considerations which were relevant to determine whether, even assuming that that was income, the amount was deductible, were different...." Accordingly, when the consideration for an amount to be income and its allowability as a deduction are different, the mere fact that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------- Sales Tax Haryana 4,02,875.76 This is balance in the running account and is being paid as and when the demand arises. Central Sales Tax 6,029.51 This is balance in the running account and is being paid as and when the demand arises. Sales Tax Jammu 60,000.00 The matter is in dispute and is pending settlement with dealer M/s Praveen Singh Shiv Dass, Jammu and M/s. Inderjit Balkishan, Jammu. Sales Tax Punjab 1,17,003.02 Paid in the next year. ------------- Total 5,85,908.29 ------------- Sd/- Director" ------------------------------------------------------------------------------------ 3. For assessment year 1979-80 the assessee in response to Assessing Officer's letter dated 23rd May, 1981 gave the information regarding the payments of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax as it was not trading receipt and that the money collected was in trust with the assessee and refundable to the customers. The Assessing Officer not accepting the claim of the assessee, made an addition of Rs.1,08,580 for A.Y. 1978-79 and Rs.62,715 for A.Y. 1979-80 on account of escaped income on the basis of collection of sales-tax in excess of demand. The assessee appealed to the CIT(A) challenging the validity of the proceedings initiated under section 147 as also the additions in respective assessment years. However, the CIT(A) Karnal vide order dated15-5-1991dismissed the appeals of the assessee against which the assessee is in appeal before us. The issue raised in these appeals is, inter alia, relating to the validity of the proceedings under section 147. It was vehemently argued by the ld. A/R that the assessee had disclosed the primary facts before the Assessing Officer during the course of original assessment proceedings and, therefore, initiation of proceedings under section 147 was unwarranted. Whereas my ld. brother has accepted the contention of the assessee in the proposed order, as already pointed out, I am unable to subscribe to that view. 7. It is absolutely c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability, if any out of the "Sales tax Haryana A/c." It is evident from the facts that the Assessing Officer has not been informed by the assessee about the fact that substantial part of the sales tax collection was not payable to the sales-tax department. One may not be able to say at this stage with certain degree of certainty as to whether the suppression of information was conscious or inadvertent. Nevertheless I have no doubt in my mind that there was omission to furnish the vital piece of information which was necessary for purposes of assessment. 8. It has to be borne in mind that assessment year involved in these appeals are 1978-79 and 1979-80 and section 43B effective from1-4-84is not applicable. When section 43B was not in the statute the revenue did not object to directly crediting the sales tax collected to the sales tax collection a/c and debiting the sales tax payments to that account. Whereas it is by now well settled that the sales tax collected by the assessee forms part of the trading receipts Chowringhee Sales Bureau's case and (SincliarMurray Co.'s case). It is also well settled that in a case where the books of a/c are maintained on mercantile basis, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e about the fact that the assessee had collected sales tax in excess of its liability. 10. My ld. brother has referred to the decision of the Supreme Court in the case of M.B. Abdulla which in my humble view is in applicable to the facts of this case. Their Lordships of the Supreme Court were considering a reference on a question of law. The jurisdiction of High Court and the Supreme Court in the matter of income-tax reference is advisory and normally whatever questions arise out of the findings of the Tribunal are considered and esteemed opinion rendered. Their Lordships in that case refused to consider an issue which had not been raised before the Tribunal. My ld. brother has ousted from the said decision in the proposed order where their Lordships have expressed the view that "whether an amount was a business loss, was substantially different from the question as to whether the amount was income." 11. Their Lordships were faced with a situation where the business loss was claimed, by the assessee to be allowed against the income which was refused to be considered by the Supreme Court. If such a situation had arisen before the Tribunal, it is doubtful if the claim could be ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Basti Sugar Mills Co. Ltd v. CIT[1983] 142 ITR 487/ [1982] 10 Taxman 306. 15. On the basis of principles of law laid down by the Supreme Court and the Jurisdictional High Court of Delhi, it is clear that the assessee had failed to disclose the material facts at the time of original assessment. In fact, the information furnished by the assessee was misleading and accordingly in my view the initiation of reassessment proceedings under section 147(1)(a) was justified and perfectly in order. The contention raised on behalf of the assessee to the contrary is accordingly rejected. 16. Since my ld. Brother has accepted the appeals of the assessee on the legal ground, he has not expressed his opinion about the assessability of the sales tax collected in excess of the liability by the assessee. The only plea raised by the assessee on merits of assessment of the said sales tax is that there was a possibility of the amount so collected being refunded to the customers. He specifically asked the ld. counsel during the hearing of the appeal as to whether any amount has been refunded to the customers despite expiry of about two decades from the date of collection, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputedly the entire receipts collected alone would not constitute an income without taking into account the liability pavable in this regard. Thus the disclosure of facts in regard to liability payable are equally important to find out if the excess collection of sales-tax constitutes an income or not. In this context it is found that vide specific query raised marked as No. 70(c) and 70(e) the Assessing Officer required the assessee to furnish the following information:-- "70(c) Copies of Central Excise, Sales-tax accounts and when the amounts outstanding in these accounts were actually paid to the departments concerned. 70(e) Particulars of amount(s) paid/payable as Sales-tax, Excise duty, customs duty etc. which is disputed and the present stage of litigation in that regard." From the above it is clear that specific information was sought as to when the payments were actually made to the department. The assessee without furnishing specific information gave copies of sales-tax accounts for the previous year1-9-1976to31-3-1977for assessment years 1978-79. Similar was the case for assessment year 1979-80. The information furnished by the assessee in no way gave clue to the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchaser includes sales tax or whether sales tax is separately collected, the sales tax forms part of the consideration for the sale and it forms part of the turnover of the seller. The amount of the sales tax payable in respect of the sales effected by a particular assessee forms part of his trading receipts and has to be shown on the credit side. As and when he pays the sales tax to the authorities, he can claim deduction for the sales tax paid; in case he has to refund the sales tax to the original purchaser who purchased the goods from him, then the amount so refunded will also be a deduction which he can claim and it must be granted to him, that being deduction on the expenditure side. Therefore, in the instant case, the assessee-firm, which was maintaining its account on mercantile basis, was bound to show as trading receipt, all the amounts which accrued due to it or which were collected by it as sales tax and it was bound to show on the debit side of the accounts, the amounts which it paid by way of sales tax. The fact that no such entries showing credits and debits in respect of sales tax collected and sales tax paid, were made by the assessee-firm, does not alter the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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