TMI Blog2019 (3) TMI 1763X X X X Extracts X X X X X X X X Extracts X X X X ..... tory obligation, rendering the entire proceedings culminating in reassessment order(s) and the demand notice(s) bad in law. Where the proceeding itself is contrary to the statutory prescriptions, a participation by the petitioner in the same, would not provide it with lawful sanction. The entire reassessment proceedings founded on the audit note impugned at Annexure 2/1 of the respective writ petitions, for the assessment years 2012-13 and 2011-12 respectively culminating in the order of reassessment dated 2.8.2018 and the demand notice dated 31.8.2018 impugned at Annxures 3/1 and 3/2 to the respective writ petition, cannot be upheld - Petition allowed. - Civil Writ Jurisdiction Case No.22765 of 2018, Civil Writ Jurisdiction Case No. 23880 of 2018 - - - Dated:- 5-3-2019 - HONOURABLE MR. JUSTICE JYOTI SARAN AND HONOURABLE JUSTICE SMT. NILU AGRAWAL For the Petitioner : Mr. Satyabir Bharti, Adv., Mr. Alok Chandra, Adv. For the Respondent : Mr. Vikash Kumar, SC-11, Mr. Bishwa Bibhuti Kumar Singh, AC to AG ORAL JUDGMENT (Per: HONOURABLE MR. JUSTICE JYOTI SARAN) The petitioner in the two writ petitions, which have been heard analogous is the same, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any running in the name of M/s Iceberg Industries Limited having its registered office at New Delhi which company merged with the petitioner company pursuant to a scheme of merger under sections 391 and 394 of the Companies Act, 1956. The petitioner is an assessee under the Act and the Rules framed thereunder, the Bihar Tax Entry of Goods into Local Areas for Consumption, Use or Sale therein Act, 1993 (hereinafter referred to as the Entry Tax Act ) and the Rules framed thereunder as well as under the Central Sales Tax Act, 1956 (hereinafter referred to as the CST Act ) and the Rules framed thereunder. While C.W.J.C.No. 22765/2018 relates to assessment/ re-assessment proceeding for the assessment year 2012-13, the second writ petition raises similar issues in relation to the assessment year 2011-12. It is the case of the petitioner that it filed its return quarterly and annual returns together with the tax audit report within due date as prescribed under section 24(3) of the Act i.e. before 31st day of December of the year following the year to which such return relates. It is urged that by the order dated 26.3.2016 the petitioner was assessed to payment of tax to the tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned SC-11. Mr. Satyabir Bharti, learned counsel for the petitioner, while taking this Court through the sequence of events, has invited our attention to the audit objection of the CAG enclosed at Annexure 2/1 to the respective writ petition to submit that while the opening line of the audit objection clearly records that scrutiny/ assessment has not yet been finalized, which means that the scrutiny and/or assessment for the period in question was yet to take place, the audit objection at the footnote records after these were pointed out in audit, the DCCT (In-charge) stated that the matter will be examined. Result thereof may be intimated to audit. Mr. Bharti in reference to the copy of the audit objection submits that though it does not bear any date, but since the audit objection records that the scrutiny/ assessment has not been finalized, it means that the audit took place prior to assessment proceedings and which is confirmed by the footnote present at Annexure 2/1 of C.W.J.C.No. 23880/2018 which records the assurance of the Assessing Officer of looking into the matter. According to the learned counsel, the assessment proceedings have taken place for each of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of an assessment or reassessment or scrutiny of any return. In reference to the audit report at Annexure 2/1 to the respective writ petition he submits that the very disclosure by the CAG that neither the scrutiny nor the assessment had been finalized, by itself renders the audit objection unsustainable for initiation of any proceeding under section 33 of the Act . According to Mr. Bharti, the prerequisite for initiating proceeding under section 33 of the Act are missing in the case. According to the learned counsel, the submissions above would indicate that the order of reassessment is a result of change in opinion on the same set of materials by the Assessing Officer which has been held impermissible in the judgments rendered on the issue. Learned counsel in support has referred to the following judgments: (i) (1979)4 SCC 248 (M/s Indian and Eastern Newspapers Society v. CIT) Para-14 (ii) (1975)4 SCC 375 (Gemini Leather Stores v. the Income Tax Officer) Para-3 (iii) (2015)17 SCC 324 (State of UP v. Aryaverth Chawal Udyog) Paras- 29 30. Opposing the arguments of Mr. Bharti, Mr. Vikash Kumar, learned SC-11, has submitted that the writ petition is not mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the respondents in paragraph 6 of the counter affidavit to submit that the respondents themselves accept to an implied satisfaction on the audit objection even when the law prescribes a recording of such satisfaction. As regarding participation in the reassessment proceeding he submits in reference to the judgment of the Supreme Court reported in (2012)4 SCC 307 (Kanwar Singh Saini v. High Court of Delhi) Paras 22 23 that a mere participation in a proceeding does not confer jurisdiction on a forum and thus, simply because the petitioner has participated in the reassessment proceeding it would not validate the illegality in the proceedings. We have heard learned counsel for the parties and have perused the records and in the nature of the arguments that has been advanced before us, we are of the opinion that the following issues falls for consideration on the inter-party contest which we have also noted in our order dated 22.1.2019 and runs under: (a) Whether in absence of any order on scrutiny or assessment or re-assessment, the audit objection raised simply in consideration of the returns filed by the petitioner, has lawful sanction in view of the stipulation presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 33 of the Act , inter alia, provides that where an objection has been made by the Comptroller and Auditor General of India in respect of an assessment or reassessment made or scrutiny of any return filed under the Act , the prescribed authority shall proceed to reassess the dealer with respect to those assessment or reassessment or scrutiny, as the case may be, ... Rule 25(1) of the Rules framed thereunder, inter alia, provides that if any irregularity relating either to fact or law committed in course of any proceedings is pointed out by the Comptroller and Auditor General, the authorities specified in Rule 62 shall, upon being satisfied about the lawfulness of such objection and after giving the dealer an opportunity of being heard, proceed to reassess the tax due from the dealer. Once the assessing authority records satisfaction on the lawfulness of the audit objection then hearing has to proceed in the manner set out in Rule 24. It further provides that if the prescribed authority is not satisfied by the audit objection, it shall record its views and forward the same to the Commissioner alongwith a copy of the original order and the copy of audit objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in him under section 33 of the Act which casts an obligation on him to proceed in the manner prescribed. A plain reading of the order sheet in the reassessment proceedings enclosed at Annexure 3 to the respective writ petition would show that it is simply taking note of the audit objection that the assessing authority has proceeded to issue notice to the petitioner without bothering to record his satisfaction as to its lawfulness. Rule 25 of the Rules is very explicit when it requires the authority specified in Rule 62 to proceed to reassess the tax due from the dealer only upon being satisfied with the lawfulness of such objection. While the legal position is well settled in this regard and the judgments relied upon by Mr. Bharti are in confirmation of the legal position, that the assessing authority has admitted at paragraph 6 of the counter affidavit that it is after getting impliedly satisfied with the facts stated in the audit objection that the notice was issued to the petitioner, the mechanical discharge is confirmed. The legal position regarding reopening of the assessment is long well settled but the case in hand is a confirmation of the fact that the taxing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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