9911796707
TMI Blog1997 (1) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ble 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 Sales tax for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 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. In relation to assessment year 1979-80, the assessee, in response to the Assessing Officer's letter dated 23-5-1981 brought to the notice of the Assessing Officer the fact that the following information about the aforesaid sales tax collection before issuing the notice under section 148:-- "(i) Details of Sales Tax and Central Sales Tax payable as on 31-8 1978 (A.Y. 1979-80) clearly appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerns from which the sales tax had been collected. 5. The reopening of assessment is to assess sales tax collected by the assessee on excise duty which was found not payable. The Revenue's claim is that it was a fact well-known to the assessee that the excess collection was not a liability under the Sales Tax Act when it filed the returns but, even then, the assessee did not declare the same as its income. The assessee's contention is that there was no failure or omission on its part to disclose the material facts necessary for assessment of the said amount. The material fact for bringing such income to tax is the factum of receipt of sales tax by the assessee and that fact was not only inquired into bv the Assessing Officer but necessary material thereof was also brought on record in the original assessment proceedings for both the years under consideration. When the entire receipt is disclosed by the assessee, it is unusual to contend that the assessee failed to disclose a part of the receipt which, according to the Revenue, is taxable. It is not as though the excess collection on account of sales tax alone was a trading receipt/income of the assessee. 6. We have heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore income of the assessee -- See the decision of the Supreme Court in the case of Chowringhee Sales Bureau (P.) Ltd. v. CIT[1973] 87 ITR 542, and in the case of Sinclair Murray, & Co. (P.) Ltd. v. CIT [1974] 97 ITR 615. 7. Against this receipt a deduction was of course to be allowed on account of the assessee's liability as per the relevant sales tax law and only the net amount was to be taxed as income of the assessee. When the entire amount of sales tax collected was assessable as trading receipt and the factum of receipt was disclosed in the original assessment proceedings, in our opinion, the assessee cannot be accused of not disclosing as to how much was the taxable amount. It is a matter of computation of income and that is the job of the Assessing Officer. When the entire receipt was disclosed, it was for the Assessing Officer to tax that amount after allowing the liability and he should not have left it untaxed on the assumption that there was a corresponding statutory liability payable by the assessee. The assessee's failure to disclose only a part of the collection not payable under sales tax law may be a ground for not allowing the deduction, but it cannot be a gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the assessments made for both the years are accordingly cancelled. The appeals are allowed. DISSENTING ORDER Per M. Bakhshi, JM -- I have gone through the order proposed by my ld. brother Shri R.P. Garg. Since I have not been able to persuade myself to subscribe to the view expressed by him, I hereby pass a separate order. 2. The appeals before us filed by the assessee relate to assessment years 1978-79 and 1979-80. Original assessments for both these assessment years had been made under section 143(3). During the course of assessment proceedings for A.Y. 1978-79, the Assessing Officer (hereinafter mentioned as Assessing Officer) had issued a questionnaire dated1-11-1980wherein the assessee was asked to file 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." Though the Assessing Officer had specifically asked the assessee to give the details of the amounts of Central Excise and Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 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/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the belief that the income of the assessee had escaped assessment for A.Y. 1978-79 and 1979-80 and accordingly notices under section 148 were issued. The assessee filed the returns and claimed that the excess collection of sales tax was not liable to tax 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us that the assessee instead of furnishing complete details as required by the Assessing Officer furnished the details of payments and collections relating to the previous year only. The assessee did not give any information about the disputed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid as and when demand arises. This gave an impression, that the entire sales tax collection was payable to the Sales tax Deptt. From the information furnished by the assessee it cannot be said that the Assessing Officer would have got even a clue 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d". It has further been held that once it was found that the basic material facts had been untruly stated, the entire edifice built thereon crumbled and for that reassessments were entirely justified. Similar view has been taken by the Delhi 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the amount in question should first constitute an income and then it should be assessable for the concerned year and that too in the hands of the assessee. In the context of Sales-tax as is the case of the assessee, undisputedly 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 gav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... context we would like to quote the observations of their Lordships of Gujarat High Court in the case of Motilal Ambaidas v. CIT[1977]108 ITR 136 "Held, that whenever any sale takes place, whether the price quoted to the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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