TMI Blog2015 (4) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... that it appeared to the Assessing Officer that its whole/a part of turnover of sales/purchases for the tax period 01.04.2008 to 20.05.2011 has (i) escaped assessment, (ii) has been under assessed. Needless to say that the petitioner is entitled to be intimated the detailed reason as to why it appeared to the Assessing Office that its turnover of sales/purchases for the aforesaid tax period has escaped assessment and/or has been under assessed. Such detailed reason is nothing but the contents of the seized documents which were seized in course of inspection. - The same reason is applicable as to why before production of the regular books of account the detailed reason for initiating reassessment proceeding cannot be supplied to the dealer petitioner. It needs to be noted that production of the books of account is not dependent on the receipt of copies of seized documents and/or knowing of reasons for reopening the assessment. The regular books of account are required to be maintained statutorily and to be in custody of the petitioner. The Assessing Officer had issued notice for production of the regular books of account in the custody of the petitioner. Issuance of copies and sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her than the principal place of his business, the relevant accounts, registers and documents in respect of each such branch shall be kept by him at the concerned branch. Notice for assessment of tax on escaped turnover in Form VAT 307 was issued to the petitioner on 28.03.2012 through process server fixing the date to 10.05.2012. Pursuant to the said letter, the petitioner filed a time petition and the case was adjourned and posted to 06.06.2012. Since the petitioner did not turn up on the date fixed, one more intimation was issued to the petitioner. On 18.07.2012, the petitioner again moved a time petition. Thereafter, two more intimations were issued to the petitioner. On those dates, the dealer did not produce the books of account. However, in response to notice dated 11.10.2012, the petitioner filed a petition to intimate him the reasons of reopening the case. On 27.06.2013, another intimation was issued to the dealer fixing the date to 16.07.2013. On that date, the dealer failed to appear before the Assessing Officer to produce the books of account. Thereafter, the impugned ex parte assessment order was passed. - Thus, it may be seen that though several opportunities were g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the regular books of account with reference to the seized documents to redo the assessment and by that no prejudice will be caused to the interest of the State. - Held that:- There are certain cases where if ex parte orders are set aside to give an opportunity of hearing to the aggrieved parties that may amount to granting a boon to such parties, as they would be able to achieve their unholy purpose and in that case the very purpose of passing ex parte order is frustrated. The obvious reason for putting forward such a pre-condition is that the petitioner wanted to know the contents of seized documents before production of regular books of account so that he could be able to manipulate/prepare its regular books of account, in line with contents of the seized document. Despite a number of opportunities being allowed to produce the regular books of account, the dealer-petitioner did not produce the same and thereby the Assessing Officer was compelled to pass the assessment order ex parte disclosing the contents of the seized documents in the assessment order. If the said ex parte order is set aside and the dealer would be given an opportunity to produce its regular books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the OVAT Act under Sections 39, 40, 42 and 44 for the period 01.04.2011 to 25.05.2011. Opposite Party No.2, STO, Investigation Unit, Rourkela Circle-2, Panposh visited the place of business of the petitioner- Company on 20.05.2011. On the date of inspection, without carrying on weighment of the physical stock, Investigating Officer alleged suppression of sale/purchase turnover. Opposite party No.2 without actual verification of the books of account and physical stock at the time of visit wanted production of accounts at his office for which notice in Form VAT 401 was issued to the petitioner fixing the date to 27.05.2011. In course of inspection, opposite party No.2 seized note books, files, documents vide seizure list dated 20.05.2011. Opposite party No.2 submitted the ex-parte report alleging suppression of purchase/sale turnover against the petitioner suggesting assessment of escaped turnover and tax for the aforesaid tax period. Thereafter, proceeding under Section 43 of the OVAT Act for the tax period 01.04.2008 to 20.05.2011 was initiated by issuing notice dated 28.03.2012 in Form VAT 307 fixing the date for production of regular books of account and documents to 10.05.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial mind, as required under Rule 50(4) of OVAT Rules, the Assessing Officer endorsed the allegation raised in the report. Opposite party No.1 has simply noted the seized documents and number of written pages consisting dispatch/sale of sponge iron, iron ore fines, coal fines and accepted the report. 4. The petitioner in the present case cooperated with the Inspecting Officer. The action of opposite party No.1 in retaining seized documents for more than six months is in violation of provisions of Section 73(7) of the OVAT Act. The impugned assessment order has been passed in violation of principles of natural justice as no reason has been assigned for raising such demand. Such action of the Assessing Officer is contrary to the law laid down by the Hon ble Supreme Court in CCT Vs. Shukla and Brothers, (2010) 4 SCC 785. Placing reliance on the judgment of the Hon ble Supreme Court in the case of Steel Authority of India Limited Vs. S.T.O., Rourkela (2008) 16 VST 181 (SC) and Raj Kishore Jha Vs. State of Bihar (2003) 11 SCC 519, Mr.Sahoo submitted that reason is the heart beat of every conclusion and without it the same becomes lifeless. Mr.Sahoo further submitted that as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to any discretionary relief. The averments made in the writ petition are misleading. 6. On the rival contentions of the parties, following questions fall for consideration by this Court. (i) Whether in the facts and circumstances of the case, the Assessing Officer is justified in insisting production of books of account before supplying the certified copy of seized document and reason for reopening the assessment? (ii) Whether reasonable opportunity of hearing has been afforded to the petitioner and thereby the principle of natural justice has been duly complied with before passing the impugned order of assessment? (iii) Whether opposite party No.1-Assessing Officer is justified in passing the impugned order ex parte? (iv) Whether the Assessing Officer has passed the impugned assessment order assigning basis/reasoning for determination of the escaped turnover and tax due thereon and thereby the principle of natural justice has been duly complied with? (v) Whether the Assessing Officer is justified in accepting and relying on the allegations raised in the report in absence of any explanation furnished by the dealer to rebut the same despite availing seve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act was initiated by issuing notice dated 28.03.2012 for assessment of tax on escaped turnover in Form VAT 307 for the above tax period. In the said notice dated 28.03.2012, the petitioner was informed that the whole/part of sale and purchase for the aforesaid tax period has escaped assessment for which the dealer was required to appear before the opposite party No.1-Deputy Commissioner of Sales Tax, Rourkela Circle, Panposh, Sundargarh on 10.05.2012 with the books of account relating to his business maintained as per OVAT Act and Rules framed there-under. By the said notice, the dealer-petitioner was further informed that in the event of its failure to comply with the terms of that notice, the opposite party No.1 shall proceed to assess the petitioner under Section 43 of the OVAT Act to the best of his judgment. The petitioner-dealer was also directed to show cause as to why in addition to the amount of tax that may be assessed on it, a penalty equal to twice the amount of tax assessed shall not be imposed on it under sub-Section (2) of Section 43 of the OVAT Act. 8. On receiving the aforesaid notice dated 28.03.2012, the petitioner made an application on 10.05.2012 before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account before supplying the copy of the seized documents and the reasons for reopening the assessment. 11. At this juncture, it would be appropriate to refer to the judgment of this Court in the case of Lakhiram Jain and Sons (supra), wherein, the question that fell for consideration before this Court was whether the Assessing Officer is justified in insisting upon production of the books of account for verification before issuing certified copies of the seized documents. This Court in the said case, taking note of several judgments of this Court and Hon ble Supreme Court including judgment in the case of Kanak Cement Pvt. Ltd. vs. Sales Tax Officer, [1997[ 105 STC 112 (Orissa) and G.K.N. Driveshafts (India) Ltd. vs. Income Tax Officer, (2003) 259 ITR 19 (SC), held as follows: ...Needless to say that an assessing authority is entitled to collect the materials behind the back of the assessee. It is not necessary that all the materials so collected by the assessing authority need be confronted to the assessee. Only those materials which the assessing authority wants to utilize against the assessee in assessment is bound to be disclosed to the assessee. In appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. So far as supply of reason for reopening of assessment is concerned, it may be noted here that vide notice dated 28.03.2012 in Form VAT-307 issued under Sub-rule (1) of Rule 50 for initiating reassessment proceeding, the petitioner was intimated that it appeared to the Assessing Officer that its whole/a part of turnover of sales/purchases for the tax period 01.04.2008 to 20.05.2011 has (i) escaped assessment, (ii) has been under assessed. Needless to say that the petitioner is entitled to be intimated the detailed reason as to why it appeared to the Assessing Office that its turnover of sales/purchases for the aforesaid tax period has escaped assessment and/or has been under assessed. Such detailed reason is nothing but the contents of the seized documents which were seized in course of inspection. In the preceding paragraphs a detailed discussion has been made as to why the contents of the seized documents cannot be supplied before production of the regular books of account. The same reason is applicable as to why before production of the regular books of account the detailed reason for initiating reassessment proceeding cannot be supplied to the dealer petitioner. 14. At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt have not been seized by the Department and the same are lying with the petitioner. 18. Questions No.(ii) and (iii) being interlinked, they are dealt with together. The questions are whether reasonable opportunity of hearing has been afforded to the petitioner and thereby principle of natural justice has been complied with before utilizing the incriminating materials seized from its business premises against the petitioner and Assessing Officer is justified in passing the impugned order ex parte. 19. When a proceeding under Section 43 of the OVAT Act is initiated on the basis of a report submitted by any agency, the assessee is entitled to be heard at two stages, i.e., (i) in course of inspection of the business premises till submission of the report by the inspecting officer, (ii) after commencement of the re-assessment proceeding by issuance of notice for assessment of tax on escaped turnover till order under Section 43 of the OVAT Act is passed. 20. In the instant case, undisputedly in course of inspection of the business premises of the petitioner on 20.05.2011, the inspecting team found ten sets of written documents indicating materials received and dispatched a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails business activities of the firm, to examine the detail stock of finished product, raw materials and to verify the complete books of account for the tax period from 01.04.2008 to 20.05.2011. Exhaustive stock of Ms Ingot available in the factory premises are recorded in a separate sheet of paper as dictated, counted and reported by the factory supervision who has signed on it and later on validated by the Asst. General Manager Commercial of the company. In course of inquiry 10 sets of written documents, indicating the materials received and dispatched were found in the business premises. In the event of not explained the written contents of the said documents by the Asst. General Manager Commercial of the company on the date of visit, these were seized as per U/s. 73(6) of the OVAT Act and detail copy of it was handed over to him for future reference for production of books of account and for verification of the seized documents. The person contacted failed to produce the complete books of account on the date of visit. Hence, he was asked to submit the same as per notice in Form VAT 401 issued on that date. A statement in that regard was recorded on S.A. from Sri Sanjay Kumar La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account on some plea or other, which is not legally sustainable and/or contrary to law. 24. In the above facts situation, we are of the considered view that reasonable opportunity of hearing has been afforded to the petitioner and thereby principle of natural justice has been duly complied with before passing the impugned assessment order and the Assessing Officer is fully justified in passing the said order ex parte. 25. Question Nos.(iv) and (v) being interlinked, they are dealt with together. The questions are whether any basis/reason has been assigned for determination of the escaped turnover and levy of tax thereon in the impugned assessment order and the Assessing Officer is justified in accepting the allegations raised in the report. 26. Law is well-settled that the Assessing Officer has to assign reasons in support of its determination of escaped turnover and the tax sought to be levied thereon. But where the Assessing Officer concurs with the conclusions, which are based on materials as expressed by the Inspecting Officer and he has no additional material to record its findings, in its order, the said order cannot be vitiated merely because it concurs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the best of judgment. Considering the allegation contained in the tax evasion report submitted by D.C.C.T., Enforcement, Sambalpur as true and correct, the re-assessment order is decided on ex parte basing on the information and materials available in the record on merit. (underlined for emphasis) 29. There is no quarrel over the legal proposition that there should be some reasoning recorded for declining or granting relief. The Hon ble Supreme Court in the case of Shukla and Brothers (supra) held that requirement of recording of reasoning necessarily does not mean a very detailed or lengthy order. In the instant case, the Assessing Officer has given the basis/reasons in support of determination of the escaped turnover and tax due thereon. 30. As stated above, in course of inspection on 20.05.2011, the petitioner failed to explain 10 sets of documents found by the inspecting team in its place of business. After the inspection, though opportunities were afforded to the petitioner to produce the books of account for verification, the dealer did not produce the books of account. Further, the petitioner-dealer also failed to produce the books of account before the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to say that all ex parte orders need not be set aside by higher court/authority for giving further opportunity of hearing to the party against whom ex parte order has been passed. Whether an ex parte order is to be set aside for giving further opportunity of hearing or not, it always depend on facts and circumstances of each case. There are certain cases where if ex parte orders are set aside to give an opportunity of hearing to the aggrieved parties that may amount to granting a boon to such parties, as they would be able to achieve their unholy purpose and in that case the very purpose of passing ex parte order is frustrated. For example, in the instant case, the petitioner-dealer did not only fail to produce the regular books of account during inspection of its business premises nor before the Assessing Officer and instead offered to produce the same only after receiving copies of the seized documents and reason of reopening. The obvious reason for putting forward such a pre-condition is that the petitioner wanted to know the contents of seized documents before production of regular books of account so that he could be able to manipulate/prepare its regular books of account, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order, the said order will be set aside and an opportunity would thereafter be given to the petitioner-dealer to produce its regular books of account for the purpose of examination of the said accounts with reference to the seized documents. 38. Question No.(vii) is whether the prayer of the petitioner to give it liberty to prefer appeal in case it fails to succeed in the present writ petition on merit can be granted to the petitioner. 39. The above prayer of the petitioner is misconceived and cannot be granted. Needless to say that if the High Court is called upon to decide the legality of an order of assessment on its own merit, it would be a futile exercise to relegate the petitioner-dealer to approach the statutory appellate authority after the High Court deciding the case on merit. Therefore, the plea of the petitioner that this Court can after adjudicating the merits of the issues involved grant liberty to the petitioner to avail statutory remedy is fallacious and such a prayer of the petitioner cannot be allowed. It may be relevant to note that when the above prayer was advanced by Mr. Sahoo, Senior Advocate in course of his argument, he was specifically asked ..... X X X X Extracts X X X X X X X X Extracts X X X X
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