TMI Blog2013 (5) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... are brothers. Thus, in M/S Parmarth Iron Pvt. Ltd. besides the aforesaid three brothers, Vijay Kumar, Sanjay Kumar and Raj Kumar are the directors. Statement of Lalit Kumar Agrawal, one of the directors in both i.e. in M/S Parmarth Iron Pvt. Ltd. and M/s Parmarth Steel & Alloys Pvt. Ltd. was also recorded, who has confirmed the statement given by Mohan Agrawal, Cashier. He has confirmed panchnama, seizer of computer's Hard-disk and other documents during search operation. He has further stated that the goods were sold by under billing or even without bills. Cash sales were also affected. Therefore, the argument of the petitioner that there is no material to form the belief that turnover has escaped assessment, is not correct. The seized material is relevant material. Thus the irresistible conclusion is that there is valid material to form a belief that the turnover of the petitioners has escaped assessments - Writ Tax No.-874 of 2010, Writ Tax No. - 875 of 2010 - - - Dated:- 8-5-2013 - Prakash Krishna And Manoj Kumar Gupta,JJ. For the Petitioner : Krishna Agrawal,P. Agrawal For the Respondent : C. S. C. JUDGMENT (Delivered by Prakash Krishna,J.) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the escaped turnover is estimated to 1557 ton of iron and for the other assessment years, the escaped turnover were estimated on similar figures. Copies of statement recorded during search, investigation and enquiry, were made available to the Commercial Tax Department. On getting information, show cause notice under Section 21(2) of the Act was issued as to why the permission/sanction for re-opening of the assessments for assessment years referred to above should not be granted on the basis of these materials. The petitioner submitted a reply stating that the matter is still pending consideration before the Excise Department. It was stated that the manufacturing capacity of the petitioner's unit is at 16,000.00 M.T. per year and any production beyond the above, is not possible. It has no concern with M/s Parmarth Iron Pvt. Ltd. or with the seized computer Hard-disk. It has no concern with the building wherein the search operation has taken place. The statements which were recorded before the Excise Department were obtained by the Excise Officials under duress and subsequently, those statements have been retracted. The assessments were completed after taking into considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entirety and it was submitted that M/s Parmarth Steel Alloys Pvt. Ltd. and M/s Parmarth Iron Pvt. Ltd. are two separate legal entities, separately registered as Companies under the provisions of Companies Act. Reliance has been placed on certain decisions in support of the above proposition that the proceedings cannot be initiated for the purposes of verification of the information received by the S.T.O. In reply, learned counsel for the respondents, on the other hand, submits that in the aforesaid search operation which also took place at the business places and at the residence of the Directors of both companies, concealment of huge production of goods was detected by the Excise Department. Statements of the Directors were recorded wherein they have accepted the clandestine removal of goods and production of goods out of books. Subsequent retraction by them is nothing but after thought. The effect of the statements and their withdrawal at the subsequent stage will be examined in the light of the attending facts and circumstances of the case at the reassessment proceedings itself. It is not an appropriate stage to rake up or raise these issues which touches the merit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessing authority of the copy of the order amending or cancelling the aforesaid certificate or by March 31, 1995, whichever is later: Provided also that the assessment or re-assessment for the assessment year 1989-90 may be made by March 31, 1995]. A Division Bench decision of this Court in the case of M/s S.K. Traders, Modi Nagar, Ghaziabad versus Additional Commissioner, Grade_I, Trade Tax, Zone Ghaziabad and another, 2008 U.P.T.C. 392, has held that the change of opinion may arise even if some material has been brought on record after assessment has been completed or it may be because of result of lack of care or inadvertence on the part of the Assessing Officer. The relevant paragraphs are reproduced below: 50. First proviso to sub-section (2) of Section 21 of the Act empowers the authority to initiate proceedings for reassessment even in the case where there is a change of opinion. The change of opinion may arise even if some material has been brought on record after assessment has been completed or it may be because of result of lack of care or inadvertence on the part of the Assessing Officer. 51. In the case of M/s Shyam Babu (Supra) a Division Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorise the assessing authority to make the assessment or re-assessment beyond the period of limitation prescribed under Section 21 (2) of the Act. Therefore, we are of the view that a detailed reasoning is not required to be given while granting the authorisation. What is required under the proviso is that there should be an application of mind to arrive at the satisfaction on the consideration of the reasons recorded and the submissions of the assessee. We have gone through the order passed by the Additional Commissioner, Grade-1, Trade Tax, Moradabad Zone, Moradabad under the proviso to Section 21 (2) of the Act. The order reveals that he has considered the reasons recorded by the assessing authority and also considered the reply and after being satisfied granted the approval. Therefore, the order cannot be said to be mechanical and without application of mind. Learned counsel for the petitioner has rightly withdrew his submission challenging the order under Section 21 (2) of the Act passed by the Additional Commissioner, Grade-1, Trade Tax, Moradabad Zone, Moradabad. These decisions, therefore, lay down the following: (1) Section 21(2) provides that permission can be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement given by Mohan Agrawal, Cashier. He has confirmed panchnama, seizer of computer's Hard-disk and other documents during search operation. He has further stated that the goods were sold by under billing or even without bills. Cash sales were also affected. The modus operandi of the business has been given in reply to the question no. 3. Therefore, the argument of the petitioner that there is no material to form the belief that turnover has escaped assessment, is not correct. The seized material is relevant material. Whether the statements were obtained under duress or not, shall be considered at appropriate stage of the proceedings. Suffice it to say that the material for forming opinion that the turnover of the petitioner has escaped assessment, is there. It cannot be said that the permission has been granted either mechanically or without application of mind. The matter has been discussed in detail while granting permission. Strong reliance was place on para-11 of the judgment of the Apex Court in the case of The Commissioner of Sales Tax, U.P. versus M/s Bhagwan Industries (P) Ltd., Lucknow (1973) 3 SCCC 265, wherein the import of phrase reason to believe has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the insufficiency of material is no ground for interference by the Court but the relevancy of the material can be examined by the Court. The Court has to find out as to whether the grounds are of extraneous character. The belief entertained by the Assessing Officer must not be arbitrary or irrational. It should have rational nexus with the reasons. The other limb of the argument of the petitioner's learned counsel is that the information may be there but it is for the Assessing Authority to form a belief which according to him is lacking in the present case that the turnover has escaped assessment. A distinction between reason to suspect and reason to believe was put forward. In this regard, reliance was placed upon the Apex Court judgment in the case of M/s Indian Eastern Newspaper Society, New Delhi Versus Commissioner of Income Tax, New Delhi (1979) 4 SCC 248, para-13 in particular, a case under Section 147(b) of the Income Tax Act. We hardly see its application to the present case. There the Apex Court was called upon to interpret the word information as had occurred in Section 147(b) of the Income Tax Act (as it then stood). In that connection, the Apex Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that opportunity of cross examination be granted are superfluous observations, nothing to do with the grant of sanction. They are liable to be ignored. The Assessing Authority shall proceed in the matter in accordance with law. It is not necessary for us to consider the other following cases individually relied upon by the petitioner :- 1. M.L. Shukla Co. v. The Sales Tax Officer, Kanpur, 1981 U.P.T.C. 396' 2. Dass Friends Builders P. Ltd. v. Deputy Commissioner of Income Tax, (2006) 280 ITR 77 (All); 3. Commissioner of Trade Tax v. S/S Uttar Pradesh Minerals, Dehradu, 1998 U.P.T.C. 476; 4. Coca Cola Export Corporation v. Income Tax Officer another, 1998 ITR (231) 200; 5. M/s Aryaverth Chawal Udyog others versus State of U.P others, 2008 U.P.T.C. 881; 6. M/s Swati Menthol Allied Chemicals v. Assistant Commissioner (Assessment) II, Trade Tax, Rampur, 2009 NTN (40) 368. The aforestated decisions do not lay down any other principles of law and the view taken by us is not in any manner, different than one expressed in these citations. In view of the above discussions, we do not find any merit in these writ petitions. Both the writ petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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