TMI Blog1970 (3) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... is common ground that such art silk yarn imported was to be used and utilised by the petitioners in the course of their trade and manufacture of handloom cloth and that they were prohibited from selling such art silk yarn so imported. For the year ending 31st March, 1961, the petitioners filed their returns voluntarily and produced their accounts to the assessing authority and got themselves assessed in the usual way. But it should be noted that their first stand before the original assessing authority was that they imported art silk yarn and that they stocked the goods in their respective places of business within the State of Tamil Nadu and that they utilised them for the manufacture of handloom cloth. It was on this basis that the return was filed and in substantiation thereto the account books were also shown to the assessing authority, and finally the petitioners obtained exemption, to which they were entitled under the provisions of the Madras General Sales Tax Act, 1959. That the assessment was based on such representations and documentary evidence is not denied. Later it transpired that the petitioners-firm was raided by the Special Police Establishment, Madras, and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the imported goods were not sold but were used for the manufacture of handloom cloth by the petitioners. In the course of the memos. issued from time to time the respondent made it clear that, if no proper explanation was forthcoming, a penalty in accordance with law would be levied, since a good portion of the taxable turnover had escaped assessment due to the intentional non-disclosure of relevant circumstances relating to such turnover by the petitioners. The petitioners not having explained at all in spite of the opportunities given and not having discharged the onus, which lay heavily upon them, the respondent had to conclude that the petitioners only resold the goods in the market. Consequentially the respondent passed a revised assessment order, in which he confirmed the proposals earlier made, and after reassessing the petitioners by withdrawing the exemption irregularly granted, determined the turnover, reckoned the tax and also levied the penalty under section 12(3) of the Act. Such penalty was levied as the petitioners did not disclose the sale of the yarn in the return originally submitted by them. The petitioners' case is that no effective opportunity was given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the voluntary disclosures made by the petitioners to the Commissioner of Income-tax the respondent's case is that it does not strictly arise, because the respondent wanted to bring to tax the escaped turnover, and, as the petitioners failed to prove that the goods imported were utilised for the manufacture of handloom cloth and as the proposal was based on information secured by the respondent from both the police department and the income-tax department, the proposal and ultimate levy of tax and penalty are justified. The petitioners never attempted to prove with reference to any acceptable data that they did not sell the whole or part of the goods at Madras. Their belated case that they have sold the licences, which were highly inconsistent with their original stand, was not even established. In any event the respondent states that, as the onus of proving that the transactions are without the taxing provisions of the Madras General Sales Tax Act is on the petitioners, the contention of the petitioners to the contrary is untenable. The respondent concedes that the provision of law has been incorrectly noted in the final order as section 12(3), whereas it is claimed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed. There is a certain amount of overlapping in the content of both the sections but the power under section 16 is wider than that under section 12(2). Except the prescription as to the period of limitation set out in section 16(1)(a) it appears to us that the power of the assessing authority under section 16(1)(a) is wide enough so as to cover a case which may literally come under section 12(2) as well. But it is argued that the jurisdiction under section 16 depends on a jurisdictional fact, namely the initial discovery of any reason by the assessing authority that the whole or any part of the turnover of the business of a dealer has escaped assessment to tax. This may be so, but the distinction sought to be made out is without any difference. So long as the power is given to the assessing authority to reopen the assessment for any reason, which, though apparently subjective, should withstand the test of objectiveness as well, it cannot be said that the power exercised under section 12 or under section 16, in so far as the imposition of penalty is concerned is deeply divergent or irreconcilably different. It cannot be said that if the assessing authority quotes or misquotes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... data indicated in either of these sections for levying such penalty. If the assessee has correctly understood the true purport of the notice, then it provides another guideline to sustain the action of the authority as being well within its power. Thus we are of the view that the assessing authority cannot possibly be tied down to the quotation which he mentions in the notice. As pointed out by a Bench of this court in M. S. Mariappa Nadar v. State of Madras[1960] 11 S.T.C. 215., even a wrong reference to a statutory provision may not invalidate an order, if the authority had the requisite power to pass that order, that is the jurisdiction in the exercise of which it could pass such an order. We are therefore unable to agree with the learned counsel for the petitioners that the impugned order suffers from any infirmity in the eye of law on the only ground that instead of referring to section 16 of the Madras General Sales Tax Act it has referred to section 12(3) therein. The conduct of the petitioners can now be noticed. They themselves voluntarily submitted their returns for the assessment year in question and held out that the imported yarn was utilised by them in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Such information and material served the purpose collaterally. The information which the assessing authority obtained was sufficient reason for it to hold Prima facie that a part of the turnover of the business of the dealer has escaped assessment to tax. The case of the petitioners that the goods were utilised by them in their manufacture of handloom cloth has been found to be hopelessly untrue. This is sufficient to subjectively prompt the assessing authority to take action against the delinquent assessee on the basis that it has reason to believe that a part of the turnover has escaped assessment. It is not disputed before us that if the yarn imported is not utilised in the course of manufacture of handloom cloth by the petitioners, then the petitioners would not be entitled to the exemption claimed and granted to them by the original assessing authority. If this were true, then there was sufficient reason for the assessing authority to act under section 16. The point that is made out by the assessee is that the police reports were not made available to them and no reliance can be placed upon their confessional statement before the Income-tax Officer. This would be begging th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based upon a reasonable apprehension, then it is not justiciable. A fortiori it is so in the instant case when the petitioners were taking inconsistent and irreconcilable stands in their explanations. They originally maintained that the goods were brought to Madras and utilised by them. Later they would pretend that the goods were never brought to Madras and utilised by them, and that licences were sold in a place outside the State of Madras. In such circumstances it is very reasonable for the assessing authority to expect that a part of the turnover has escaped assessment to tax. It may be that he was prompted to do so by reason of the supervening raid by the police and the confessions made by him to the income-tax department. The burden of proof of establishing that any dealer or any of his transactions is not liable to tax under the Madras General Sales Tax Act lies on the dealer. Section 10 of the Act provides for it. Even the Supreme Court has approved the intendment and the purport of this provision in State of Madras v. V.P.S.A. Narayana Nadar and Company[1968] 21 S.T.C. 25 (S.C.). The petitioners having failed to discharge the onus of proof statutorily enjoined on them, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal and for furnishing his explanation, as the original seizure of the account books was not in accordance with section 17(2A) of the Kerala General Sales Tax Act, 1125. It was primarily for the above reason that the learned Judge of the Kerala High Court thought that there was a denial of opportunity to the assessee therein. No such peculiar circumstances dealt with by the learned Judges in the above two cases are present in the cases before us and they are not even stated to be so. The petitioners were obliged to show how the goods were dealt with by them. Goods cannot disappear without disposal. It is to get over this that the belated pleas of sale of licences and importation at Bombay were set up. Even these contentions stand as bare submissions. We are not therefore convinced that no adequate opportunity was given by the assessing authority to the petitioners and that in consequence there has been a violation of the principles of natural justice in all these cases. The next point urged is about the levy of penalty. We have noticed the salient distinctions between sections 12 and 16 of the Madras General Sales Tax Act. In the matter of levy of penalty a marked difference be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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