TMI Blog2017 (3) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... s the amount of tax in respect of such turnover - There are a catena of judgments of this Court holding that assessment proceedings can be reopened if the audit objection points out the factual information already available in the records and that it was overlooked or not taken into consideration. Similarly, if audit points out some information or facts available outside the record or any arithmetical mistake, assessment can be re-opened. The Assessing Officer 20 was not satisfied on the basis of information given by the audit party that any of the turnover of the appellant-Company had escaped assessment so as to invoke Section 19 of the State Act - the assessing officer had to issue notice on the ground of direction issued by the audit party and not on his personal satisfaction which is not permissible under law - reopening of assessment not permissible. Appeal allowed - decided in favor of appellant. - Civil Appeal No: 5390 of 2007 - - - Dated:- 21-3-2017 - Mr Madan B. Lokur And Mr R.K. Agrawal JJ. For the Appellant : Mr. P.H.Parekh,Sr.Adv., Mr. Sumit Goel,Adv., Ms. Rukhmini Bobde,Adv., Ms. Ritika Sethi,Adv., For M/s. Parekh Co.,Advs. For the Respondent : Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. (e) After affording an opportunity of hearing to the appellant-Company, a re-assessment order dated 27.02.2006 was passed by the Deputy Commissioner, Commercial Taxes, Urban Circle, Jamshedpur whereby an additional demand of ₹ 35,72,475/- was created against the appellant-Company. f) Being aggrieved by the re-assessment order dated 27.02.2006, the appellant-Company preferred a writ petition being W.P. (T) No. 2630 of 2006 before the High Court. A Division Bench of the High Court, vide order dated 17.11.2006, dismissed the petition filed by the appellant Company while upholding the order dated 27.02.2006 passed by the Deputy Commissioner, Commercial Taxes, Urban Circle, Jamshedpur. (g) Aggrieved by the order dated 17.11.2006, the appellant-Company has preferred this appeal by way of special leave. 3) Heard the arguments advanced by Mr. Pravin H. Parekh, learned senior counsel for the appellant-Company and Mr. Amarendra Saran and Mr. Ajit Kumar Sinha, learned senior counsel for the respondent-State and perused the records. Point for consideration : 4) The only point for consideration before this Court is whether on the information given by the audit team ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant-Company was unable to produce the relevant records. The assessment year (AY) in question is 1991-92. The assessment order in relation to the same was passed on 24.01.1996. The show cause notice proposing to re-open the assessment was served on the appellant-Company on 28.09.2000 which was replied in detail by the appellant-Company vide letter dated 13.11.2000. Thereafter, for a period of five years, there was no communication from the side of the respondents and the appellant-Company, under the bonafide belief that the letter dated 13.11.2000 had satisfied the requirements of show cause notice, forwarded all the records to their dumping yards at Chennai. Learned senior counsel contended that owing to the above circumstances the failure of the appellant-Company to produce the aforesaid records was not at all willful. 10) Learned senior counsel finally contended that the order of re-assessment dated 27.02.2006 is illegal and the assessment proceedings cannot be re-opened on the basis of audit objection, as the same does not amount to information as contemplated under Section 19 of the State Act. The impugned order amounts to change of opinion on the same set of facts and la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd . (1998) 9 SCC 272, Anandji Haridas and Co . ( P ) Ltd . vs. S . P . Kasture and Others AIR 1968 SC 565, Commissioner of Customs, Mumbai vs. Virgo Steels, Bombay and Another (2002) 4 SCC 316, Supreme Paper Mills Limited vs. Assistant Commissioner, Commercial Taxes, Calcutta and Others (2010) 11 SCC 593 and Chatturam Ors . vs. CIT, Bihar AIR 1947 FC 32. Discussion : 16) In the instant case, an audit team of the Auditor General, audited assessment order dated 24.01.1996 and found that the dealer was allowed an exemption of ₹ 3,12,47,916/- being the amount for goods consumed by the appellant-Company during the course of execution of works contract. It is the claim of the appellant-Company that those goods were purchased on payment of tax but no declaration in Form IX-C along with other evidence was submitted. The same fact was brought to the notice of the assessing authority which in furtherance thereof issued a show cause notice to the appellant-Company. The production of Form IX-C was held to be mandatory and the claim of the appellant-Company was disallowed and an order of re-assessment date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich may be included in a notice under sub-section (2) of Section 17 and proceed to assess or reassess the amount of tax due from the dealer in respect of such turnover, and the provisions of this part shall, so far as may be, apply accordingly as if the notice under this sub-section was a notice under sub-section (2) of Section 17: Provided that the amount of tax shall be assessed or re-assessed after allowing such deductions as were permissible during the said period and at rates at which it would have been assessed had the turnover not escaped assessment or full assessment, as the case may be. Explanation: - Production before the prescribed authority of accounts, registers or documents from which material facts could, with due diligence, have been discovered by the said authority, will not necessarily amount to full disclosure within the meaning of this section. (2) (a) The prescribed authority shall, in a case falling under clause (a) of sub-section (1), direct that the dealer shall pay by way of penalty a sum not exceeding three times but not less than an amount equivalent to the amount of tax which is or may be assessed on the escaped turnover. (b) The penalty impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Staging Materials ₹ 3888798.00 Shuttering Walk-way (For Timber) ₹ 4191982.00 Tools and Tackles ₹ 3672296.00 Total ₹ 3,12,47,916.00 21) It is also pertinent to understand the meaning of the word information in its true sense. According to the Oxford Dictionary, information means facts told, heard or discovered about somebody/something. The Law Lexicon describes the term information as the act or process of informing, communication or reception of knowledge. The expression information means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or having a bearing on the assessment. We agree that a mere change of opinion or having second thought about it by the competent authority on the same set of facts and materials on the record does not constitute information for the purposes of the State Act. But the word information used in the aforesaid Section is of the widest amplitude and should not be construed narrowly. It comprehends not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission in the assessment . Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law . In view of that we hold that reopening of the case under Section 147(b) in the facts of this case was on the basis of factual information given by the internal audit party and was valid in law. The judgment under appeal is set aside to this extent. ( emphasis supplied ) 24) Similarly, in Commissioner of Income Tax, U . P . , Lucknow vs. M / s Gurbux Rai Harbux Rai (1971) 3 SCC 654, this Court has held as under:- 6. Section 15 of the Act provides that if in consequence of definite information which has come into the possession of the Excess Profits Tax Officer he discovers that profits of any chargeable accounting period have escaped assessment, etc., he may at any time serve a notice containing all or any of the requirements which may be included in a notice under Section 13 and may proceed to assess or reassess the amount of such profits liable to excess profits tax. The power so conferred can be exercised in the course of the original assessment or reassessment. It is essential, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profits Tax Officer of partial partition having been effected was relevant for the purpose of Section 15 and once he had initiated proceedings under that section he was perfectly competent and had jurisdiction to examine for the purpose of Section 10-A whether partial partition had been effected for avoidance or reduction of liability to excess profits tax. The first question, therefore, should have been answered against the assessee and in favour of the Revenue. ( emphasis supplied ) 25) In M / s Phool Chand Bajrang Lal and Another vs. Income Tax Officer Another (1993) 4 SCC 77 this Court has held as under:- 25 .. He may start reassessment proceedings either because some fresh facts come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information .. 26) The contention whether finding the information from the very facts that were already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 779.63 ₹ 16,25,25,592.37 Less: Works done by sub- ontractor ₹ 27,17,304.00 ₹ 15,98,08,208.37 Less: Labour charges and overhead charges ₹ 11,91,66,742.38 ₹ 4,06,41,465.99 Tax was levied @ 4% on ₹ 17,48,096.90 ₹ 69,923.00 @ 8% on ₹ 1,96,71,099.14 ₹ 15,73,678.93 @ 9% on ₹ 1,45,34,488.10 ₹ 13,08,103.92 @ 10% on ₹ 2,048.00 ₹ 204.80 @ 11% on ₹ 4,82,125.70 ₹ 53,033.86 @ 12% on ₹ 42,03,608.15 ₹ 5,04,432.97 ₹ 35,09,387.36 Add: Tax @ 1% on ₹ 5,55,08,612.25 ₹ 5,55,086.12 ₹ 40,64,473.48 Surcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Karnataka (1986) 62 STG 194 Se) is invited . Disposal of goods in this section (Similar to those Karnataka) was clarified as transfer of title over the goods otherwise than sale, included gifts, own use or consumption section 4 of the Act (B.F. Act) is similar to section 7 A of Tamil Nadu General Court in the case of the State of Tamil Nadu Vs. M.K. Kandaswami (1975 36 STC 191) where it was held that (1) this Section is a separate charging provision in the Act and is not subject to section 3 and (ii) brings to tax goods, the sale of which would normally have been taxed at the same point or other in the State but could not be taxed even due to destroying them or other reasons. Thus the purchase tax was leviable on goods consumed for own use. Since cost price/purchase price was reflected as value of goods consumed for own use of the dealer, the tax at the rate specified in section 12 of the Act ibid was leviable. In this case, even if same charges like Electrodes, Welding Cables, welding appliances, fuel and lubricants, oxygen and P.A. Gas safety, safety appliances valued at ₹ 44,90,114.00 was not considered as taxable, the consumable goods worth ₹ 2,67,57,802.00 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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