TMI Blog1960 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment in dispute being an original assessment, it is not barred by time as no time is prescribed for making the assessment by the Hyderabad General Sales Tax Act. On the other hand, the position taken by the assessee is that as the return was not filed before the 15th of May, 1953, as prescribed by rule 16(1) of the Hyderabad General Sales Tax Rules and as the Sales Tax Officer had not passed any order during the year 1953-54 imposing a tax on the assessee for the preceding year 1952-53, his turnover for that year must be deemed to have escaped assessment within the meaning of rule 32(1) of the Hyderabad General Sales Tax Rules, and as it was not passed within three years from the end of the year 1952-53, i.e., on or before 31st March, 1956, it was barred by time. Since the controversy in this case has to be resolved with reference to rules 16 and 32, it is convenient to read them here. Rule 16(2) says: "On the receipt of the return in the Form A the assessing authority shall, if he is satisfied after such scrutiny of the accounts and such enquiry as he considers necessary that the return is correct and complete, finally assess on the basis of the return the tax or taxes pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luntarily submitted more than 3 years of the close of the relevant accounting year. This leads us to the question as to whether the department could reject the return and make a best judgment assessment after the lapse of three years from the end of the year to which the tax relates; in other words, whether such a case falls within the purview of rule 32. It is urged by Sri Venkatappayya Sastry on behalf of the department that rule 32 could have no application to assessments made for the first time, that it would be attracted only to a case where there was an assessment at which a part of the turnover had escaped assessment and which was sought to be assessed subsequently and that, at any rate, that rule will not come into operation when the delay in filing the return is condoned and the return is taken on record. It is contended by the learned counsel that "rejection" of return can only mean refusal to take the return on file. We shall first take up the second head of the argument as it can be easily disposed of. In our opinion, there is no warrant for reading such a limitation into the rule. The word "rejection" is of wide import and takes in non-acceptance of the return. Fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner may at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess or assess as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount." The provision in that Act which corresponds to rule 16 of the Hyderabad General Sales Tax Rules is section 11(4). The learned Judges held that section 11-A of that Act did not govern cases where the assessment was being made for the first time, either on a return being made or where no return was made and action was taken under section 11(4) that assessment proceeding could be carried on beyond a year or even beyond three years and that the limitation indicated in section 11-A could not be imported into section 11, sub-sections (1) to (4). This ruling does lend some support to the view pressed upon us by the department. But this decision did not find favour with a Full Bench of the Bombay High Court presi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is seeking to tax them. In that sense we agree with the contention that it could be said that the failure on the part of the assessing authority to tax these turnovers would constitute an escaped assessment within the meaning of section 11-A." We adopt the principle embodied in this passage. To a like effect is the judgment of a Full Bench of the Madras High Court in State of Madras v. Louis Dreyfus and Company, Ltd. [1955] 6 S.T.C. 318. The ratio decidendi was stated by the learned Judges in the following passage: "Turnover escapes when it is not noticed by the officer because it is not before him by reason of any inadvertence, omission or deliberate concealment on the part of the assessee and that this would be the natural and normal meaning of the expression 'turnover which has escaped' in rule 17(1)". This principle was applied by the same Court to a case of first assessment in State of Madras v. Balu Chettiar[1956] 7 S.T.C. 519. There, the assessee did not file a return of turnover at any time for a year. The department estimated the turnover of the assessee at a particular sum on the basis of entries in his books and assessed him to pay a tax after the period of limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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