TaxTMI 
TaxTMI 
1972 (9) TMI 16
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....e, but it is stated that it was made some time in the later part of 1964. On March 30, 1967, the Sales Tax Officer, Intelligence Wing, Vigilance, Berhampur, made a search of the business premises of the respondent and seized several account books. On the following day further search was made and some additional account books were taken into possession. Later on that day, viz., March 31, 1967, the Sales Tax Officer issued the following notice under section 12(8) of the Act to the respondent : " Notice to a dealer under section 12(8) of the Orissa Sales Tax Act. To M/S. Uttareswari Rice Mills (Dealer) At/P. O. Berhampur, CAI 2127-A (Address) Whereas I have reason to believe that your turnover for the quarter ending 1963-64 on which sales tax was payable under the Orissa Sales Tax Act, 1947, has escaped assessment/has been under-assessed. You are hereby required to submit within one calendar month from the date of receipt of this notice a return in Form IV (enclosed) showing the particulars of your turnover for the year ending 1963-64. You are also hereby required to attend in person or by agent at my office at Berhampur on 11-5-67 at 11A.M. and there to produce or cause....
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....ourt, in this context, relied upon its earlier decision in the case of B. Patnaik Mines (P.) Ltd. v. N. K. Mohanty, Sales Tax Officer. It was held in the earlier case that the Sales Tax Officer had no jurisdiction under section 12(8) of the Act to issue notice for making a fishing enquity without indicating therein the reason for the alleged under-assessment. In appeal before us, Mr. Ramachandran on behalf of the appellants has referred to the provisions of section 12(8) of the Act and has argued that it is not essential to give the reasons in the notice issued under the above provision of law. The impugned notice, according to the learned counsel, cannot be quashed for non-mention of the reasons. The above stand has been controverted by Mr. Gobind Das on behalf of the respondent and, according to him, the failure of the Sales Tax Officer to mention the reasons which led to the issue of the impugned notice would vitiate the notice. There is, in our opinion, considerable force in the stand taken in this respect by the learned counsel for the appellants. Section 12 of the Act deals with assessment of tax. Sub-sections (5) and (8) of the above section read as under : " (5) If up....
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....hall, as soon as possible after they are made or published, as the case may be, be laid before the Assembly for a total period of fourteen days which may be comprised in one or more sessions. Rule 23 may be reproduced below : " 23. Calling for return when turnover has escaped assessment or has been under-assessed.---(1) If for any reason the turnover of sales or the turnover of purchases of a dealer has escaped assessment or has been under-assessed or has not been assessed due to the tax having been compounded when composition is not permissible under the Act and these rules and it is proposed to assess it the Commissioner shall serve on the dealer a notice in Form VI calling upon him to furnish a return in Form IV within one calendar month from the date of receipt of such notice. (2) Such notice may also require the dealer to attend in person or by his agent at the office of the authority issuing the notice on the date specified therein and to produce or cause to be produced the accounts and documents specified in the notice. The relevant part of Form VI referred to in rule 23 is in the following words : " FORM VI To .................................... (dealer) ........
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....rticulars thereof that the dealer shall pay penalty in addition to the tax assess, (v) Such penalty shall not exceed one-and-a-half times the amount of the tax so assessed. Although the opening words used in section 12(8) are " if for any reason " and not " if the sales tax authority has reason to believe ", the difference in phraseology, in our opinion, should not make much material difference. A reason cannot exist in vacuum. Somebody must form the belief that reason exists and looking to the context in which the words are used, we are of the view that it should be the sales tax authority issuing the notice who should have reason to believe that the turnover of a dealer has escaped assessment or has been under-assessed. The approach in this matter has to be practical and not pedantic. Any view which would make the opening words of section 12(8) unworkable has to be avoided. It may be noted in this context that in Form VI appended to the Rules, which has been prepared in pursuance of rule 23, the words used are " whereas I have reason to believe that your turnover.........has escaped assessment...... ". In the case of Commissioner of Income-tax v. Mahaliram Ramjidas, the Jud....
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....other hand, when the statute requires that the Income-tax Officer shall make a decision, which is final so far as he is concerned, upon a matter of fact, the usual expression is 'if he is satisfied' : " It was further observed : " The section, although it is part of a taxing Act, imposes no charge on the subject, and deals merely with the machinery of assessment. In interpreting provisions of this kind the rule is that that construction should be preferred which makes the machinery workable ut res valeat potius quam pereat. " In view of the criticism levelled against the wording of section 34 of the Indian Income-tax Act, the above section was amended by Amendment Act of 1939. Despite the amendment made in section 34 of the Indian Income-tax Act, the Orissa Legislature, it would appear, has used phraseology in section 12(8) of the Act similar to that of section 34 of the Indian Income-tax Act, 1922, as it existed before the said amendment. The above decision of the Judicial Committee is also an authority for the proposition that it is not necessary to intimate to the assessee the nature of the alleged escapement in the notice which is issued to him under section 34 (as it t....
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....th the issue of a notice and it is only after the service of the notice that the assessee, whose income is sought to be assessed or reassessed becomes a party to those proceedings. The earlier stage of the proceeding for recording the reasons of the Income-tax Officer and for obtaining the sanction of the Commissioner are administrative in character and are not quasi-judicial. The scheme of section 34 of the Act is that, if the conditions of the main section are satisfied, a notice has to be issued to the assessee containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22. But, before issuing the notice, the proviso requires that the officer should record his reasons for initiating action under section 34 and obtain the sanction of the Commissioner who must be satisfied that the action under section 34 was justified. There is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under section 34 must also be communicated to the assessee. " As the provisions of section 12(8) o....
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.... dealer under the above provision of law. To hold that reasons which led to the issue of the said notice should be incorporated in the notice and that failure to do so would invalidate the notice, would be tantamount to reading something in the statute which, in fact, is not there. We are consequently unable to accede to the contention that the notice under the above provision of law should be quashed if the reasons which led to the issue of the notice are not mentioned in the notice. At the same time, we would like to make it clear that if the Sales Tax Officer is in possession of material which he proposes to use against the dealer in proceedings for reassessment, the said officer must before using that material bring it to the notice of the dealer and give him adequate opportunity to explain and answer the case on the basis of that material. Mr. Gobind Das has also argued that the existence of a reason that the turnover of a dealer has escaped assessment or has been under-assessed (in cases not dealing with composition) is a condition precedent to the issue of a notice under section 12(8) of the Act. It is urged that such reason is not shown to have existed in the present case....