TMI Blog1957 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... of Taxes in March 1952, to get himself registered as a dealer. The Petitioner then filed an application on the 31st March, 1952, for registration, wherein he states his gross turnover for twelve months ending 1947-48 as ₹ 56,171-5-6. He was duly registered on the 17th of April, 1951 but no return was submitted by him as required by S. 16 (1) of the Act. The Superintendent of Taxes then served notices under Section 17 (4) of the Act calling upon the Petitioner to submit his return for the periods ending on the 30th September, 1949 to 31st March, 1952. These notices were served on the 12th June, 1952. The notice's thus covered six half-yearly periods. In compliance with these notices, the Petitioner submitted his return on the 7th July, 1952. The Superintendent of Taxes apparently not being satisfied with the returns filed, issued notices on the Petitioner under Section 17 (2) of the Act for production of evidence in support thereof and then made the assessments under Section 17 (3) of the Act, which are now impugned. This was on the 18th of December, 1952, and covered the relevant return periods, as stated above. The assessments were challenged before the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points out that if the Commissioner or the Superintendent of Taxes was satisfied that any turnover in respect of sales of goods chargeable to tax under the law had escaped assessment during any return period, it was open to the Officer at any time within three years of the aforesaid period to serve oil the Petitioner a notice under Section 19A of the Act. Compliance with S. 19A of the Act was an essential condition prior to the assumption of jurisdiction by the Officer to assess in regard to turnovers during periods which had escaped assessment; otherwise, the assessment is wholly without authority. The Board concedes that notice under Section 19A was necessary in the circumstances of the case; but it is of the view that the issue of notices under Section 17 (4) of the Act was a mere irregularity and the Petitioner having submitted his returns and having raised no objection to the notices in question, he should be deemed to have waived this right to insist upon issue of notices under Section 19A of the Act. It was, therefore, not open to him to challenge the assessment on that ground. The Board1 opined that the irregular procedure followed by the Superintendent of Taxes did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates; in the latter case, the notice has to be served by the Commissioner on the dealer concerned in the course of the year for which he is considered liable to pay the tax. In case of failure to comply with the above provisions, steps could be taken against the dealer under Section 17(4) of the Act. In the present case, the Assessee had not submitted his return under Section 16 (1) of the Act. Indeed he was not bound to do so, because he had not been registered as a dealer till 17-4-1952. Of course, there was nothing to prevent him from submitting his return, as any honest dealer would do, notwithstanding the fact that he had not been registered under the Act or even in the absence of any notice on him to submit a return under Sub-section (2) of S. 1fiui the fact remains that the dealer did not do so and S. 16 (1) of the Act had no application to him. Therefore, the other course open to the assessing officer was to issue a notice on him under Sub-section (2) of Section 16. Admittedly, this also was not done and the period for the issue of such notice had also expired. Indeed, no action appears to have been taken against the Assessee until 12-6-1952 when for the first time n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply accordingly as if the notice, were a notice served under the aforesaid Sub-section: Provided that the tax shall be charged at the' rate at which it would have been ordinarily chargeable. Section 19 may be left out of consideration, because it applies mutatis mutandis to non-registered dealers, with this difference that the period during which the Commissioner or Superintendent of Sales Taxes can serve notice is within two years of the end of the relevant period. We may recall that S. 19A was introduced in the Act by an amendment in 1951. Therefore, prior to registration of the dealer the Taxing Officer could act even under Section 19 of the Act. At any rate, at the time when action was taken, Section 19A was on the statute and the dealer had been already registered. Therefore, the section relevant for the present is Section 19A and it is contended by the learned Counsel for the, Department that there has been sufficient compliance with this provision, though not in terms at, least in substance. It is not disputed that in order to give jurisdiction to the Taxing Officer to tax in such cases it is necessary that proceedings should be initiated under this sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice was the same if a notice under Section 19A were issued calling upon the dealer to submit his returns according to Sections 10 (2) or 17 (2); and the dealer in fact in compliance with the notices submitted his returns for the periods in question without any protest or objection. That being so, the learned Counsel for the Department submits that there has been sufficient compliance with Section 19A of the Act and the dialect. In the form of the notices did not affect the jurisdiction of the Officer to assess. In any case, it is urged that by submitting his returns without any objection, the Assessee waived his right to object to the initiation of assessment proceedings which, in view of the dealer's liability to pay under the Act, could not be regarded as without jurisdiction. 5. In my opinion, there is much substance in the above contentions. In case of escaped assessments, the law gives the Sales Tax Commissioner 1 the right to initiate proceedings only under the \ circumstances existing under Sections 19 and 19A of the Act. The first essential is that the Commissioner must be satisfied in his mind upon information received that a dealer or his turnover in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 19A of the Assam Sales Tax Act. The Privy Council observed in 'Commr. of Income Tax, Bengal v. Mahaliram Ramjidas, AIR 1940 PC 124 (A), with reference to Sections 34 of the Income Tax Act that although it was a part of the taxing Act, it imposed no charge on the subject and dealt merely with the machinery of assessment; and. in interpreting provisions of this kind, the rule is that that construction should be preferred which makes the machinery workable. Of course, the point raised in that case was different. It was argued in that case that a quasi-judicial enquiry had to be held before the powers under the section could be put into operation. This argument was rejected by the Privy Council; but in doing so, their Lordships considered the scope and application of S. 34 and observed as stated earlier. Again, the decision of the Federal Court in - 'Chatturam v. Commr., of Income Tax, Bihar, AIR 1947 FC 32 (B), illustrates the same point of view. Kania J., as he then was, held thus with reference to notices under Section 22 (1) and (2) of the Income Tax Act. The Income Tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was null and void. Section 34 imposed no charge on the subject, but was merely a part of the machinery of assessment. The liability to pay the tax was founded on Sections 3 and 4 of the Income Tax Act, which were the charging sections. The jurisdiction to assess and the liability to pay the tax cannot on principle' depend upon the validity of the notice. Mr. Choudhury for the Assessee has tried to distinguish the case on the ground that there a notice under Section 34 had in fact been issued, though it was challenged on the ground of being defective and premature; whereas in the present case, there was, according to him, no such notice issued at all. I am unable to uphold this contention, because, as I have said, the issue of a notice under Section 17 (4) of the Act was in substance a notice under Section 19A of the Sales Tax Act and as such, the defect in the form of the notice was a mere irregularity on the facts of the present case, which caused no prejudice to the Assessee and did not vitiate the assessment proceedings. In holding as above, I do not ignore the fact that there is a separate prescribed form of notice under Section 19A of the Act. 7. Mr. Choudhury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision might not have been otherwise. I agree that if no return is filed by the Assessee in pursuance of; any general notice and if no individual notice is also issued on the Assessee within the period required by the law, there can be no assessment at all and no penal consequences would follow. But there is nothing to prevent the Assessee even after the expiry of the period to submit a return of his income or outturn, even in pursuance of an invalid notice, and participate in the assessment proceedings thereby giving jurisdiction to the Officer to assess by waiver or acquiescence. He might well have ignored the notices, which was not in due form and 'refused to take part in the proceedings; but if he did not, and not only allowed the proceedings to go on, but actively participated therein without any protest, he could not turn round and challenge the jurisdiction' of the Officer to assess, as in the case before us, merely because the Officer refused to give him certain deductions claimed. Chakravarty, C. J., who delivered the judgment in the Calcutta case recognised that, under the Income Tax law, it has been held that if the assesses filed a return after the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss. Their Lordships pointed out that the absence of a notice under Section 34 as required by the law was not merely a procedural defect, but a failure to comply with the conditions precedent to the assumption of jurisdiction. At the same time, the learned Chief Justice further went on to observe that no consent by the Assessee or waiver on his part could confer jurisdiction upon the Income Tax Officer to make an assessment, which he does not possess. In making these observations their Lordships seemed to doubt the correctness of the decision given by Chief Justice Chakravarty in the Calcutta case discussed earlier. While I respectfully agree that the initiation of proceedings under Section 34 was a condition precedent to the assumption of jurisdiction by the Income Tax Officer to assess where an income has escaped assessment in any particular year, I find it difficult to accept the bread proposition that in no case of this kind there could be waiver or acquiescence on the part of the Assessee so as to confer jurisdiction upon the Income Tax Officer to proceed to assess. A procedural provision, which is meant for the benefit of the Assessee, can in some circumstances be wai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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