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2015 (5) TMI 838 - DELHI HIGH COURT

2015 (5) TMI 838 - DELHI HIGH COURT - TMI - Validity of assessment notice issued - Bar of limitation - Section 34 - Held that:- Preconditions for invoking the extended period are that the Commissioner should record reasons to believe that the tax has not been paid and that the reason for non payment of tax should be concealment, omission or failure to disclose full material particulars on the part of the assessee. In the present case no such ‘reason to believe’ has been recorded - it would be a .....

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clearly in the record prior to the issuance of the default assessment notice/order or in the said notice/order itself. - reasons for extending the time for completing the re-assessment proceedings were not the reasons indicated in the proviso to section 34(1) but other purported reasons of pendency of cases, election duty etc. etc. Those purported reasons did not permit the respondent to invoke the extended period of limitation given in the proviso to section 34(1) of the said Act. - Default ass .....

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s that the default assessment notice under sections 32/33 of the Delhi Value Added Tax, 2004 (hereinafter referred to as the said Act ) which was issued on 09.07.2014, was time barred. The relevant period for assessment is 01.04.2009 to 31.03.2010. Monthly returns were filed for the entire period by the petitioner. According to the learned counsel for the petitioner the last date for re-assessment as prescribed by section 34 of the said Act would be 31.03.2014. 2. Section 34 of the said Act read .....

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believe that tax was not paid by reason of concealment, omission or failure to disclose fully material particulars on the part of the person, the said period shall stand extended to six years. (2) Notwithstanding sub-section (1), the Commissioner may make an assessment of tax within one year after the date of any decision of the Appellate Tribunal or court where the assessment is required to be made in consequence of, or to give effect to, the decision of the Appellate Tribunal or court which r .....

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son to believe that the tax was not paid because of concealment, omission or failure to disclose fully the material particulars on the part of the petitioner. It was submitted that, therefore, in terms of the decision of this court in H.M. Industries v. Commissioner of Value Added Tax: 215 (2014) DLT 671 (DB) the notice of default assessment dated 09.07.2014 was time-barred. 4. Mr Sanjay Jain, the learned ASG, appearing on behalf of the respondent submitted that if one were to examine the defaul .....

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therefore, the respondent was well within his right to pass the order within the extended period of limitation. 5. We have examined the decision of the Division Bench in H.M. Industries (supra) and we find that the present case is fully covered by the ratio laid down therein. It has been observed by the court as under:- 10. It is true that proviso to Section 34(1) does not specifically mention that reasons to believe have to be recorded in writing. However, the said requirement has to be read an .....

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n realm of absence of jurisdiction. The only way, the Commissioner/competent authority can show that he had applied his mind and had formed requisite reason to believe is by recording in writing that the case falls within the proviso to Section 34(1) of the DVAT Act. This may be indicated and stated so in the default assessment order or even in the record. In case, reasons to believe are not recorded or so indicated/mentioned in the default assessment order or in the record, it would lead to an .....

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il liability and has adverse consequences, so an assessee must have the right to question and challenge formation of the belief. An effective, decisive and erudite decision would be possible only when there would be no uncertainty and misgiving as to the reasons to believe . This could be easily and without any discern and difficulty avoided by making a note in writing . The written belief would be in consonance with the principle and mandate of good governance, fairness, transparency and would .....

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the tax has not been paid; (2) the reason for non-payment of tax should be concealment, omission or failure to disclose full material particulars on the part of the assessee. It is only when the two conditions are cumulatively satisfied and the reasons to believe show a live link or nexus with the concealment, omission or failure to disclose material facts resulting in short payment of tax or non levy of tax, that the proviso to Section 34(1) of the DVAT Act can be invoked. 19. ............... T .....

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d by the competent authority/Commissioner and should be before or at the time of passing of the default assessment order. If and had the authority, passing the default assessment order, recorded the reasons to believe on the same lines as the Objection Hearing authority, the outcome and decision possibly would have been different. (underlining added) 6. It is, therefore, clear from the said decision that the preconditions for invoking the extended period are that the Commissioner should record r .....

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(supra) which we have already extracted above. To be clear, it has been observed that it would be a virtually impossible task for the appellate authority to first find and decipher the unknown and unrecorded reasons to believe and thereupon decide whether the requisite conditions for invoking the proviso under section 34(1) of the said Act were actually satisfied or not. The issue or question raised would be answered on guess work or mere probabilities as to what the reason to believe was. It is .....

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