1. The only question of law that arises for decision in this civil revision petition is whether the respondent's right to assess the petitioner for the assessment year 1952-53 is barred by rule 34(1) of the Mysore Sales Tax Rules, 1948, which shall be hereinafter referred to as the 'Rules'. If our answer is in the affirmative, then the impugned order is liable to be quashed.
2. The material facts are not disputed. They are as follows : The original assessment order dated 26th October, 1953, was set aside by the Deputy Commissioner of Commercial Taxes, Bangalore Division, Bangalore, in appeal. He remanded the case to the Assessing Authority as per his order dated 12th November, 1954, for fresh enquiry and disposal. Subsequent to that order, the petitioner filed a return of turnover declaring his gross turnover for the year at Rs. 2,57,931-10-1 and a net turnover at Rs. 1,53,496-3-11. This return appears to have been received by the Assessing Authority on 24th February, 1956. But the Assessing Authority did not rely on that return but determined the net taxable turnover at Rs. 1,90,000 on the basis of 'best of judgment'. This order (dated 26th August, 1957) is impugned in the present proceedings.
3. It was contended on behalf of the petitioner, before the Tribunals below, and that contention was reiterated in this Court that the impugned order relates to an 'escaped assessment' and the same having been made after the period fixed in rule 34(1) of the Rules is unsustainable. The relevant portion of that rule reads thus :
'If for any reason the whole or any part of the turnover of business of a dealer .......... has escaped assessment to the tax in any year .............. the Assessing Authority ............ may, at any time within the year or the two years next succeeding that to which the tax .......... relates, assess the tax payable on the turnover which has escaped assessment .......... after issuing a notice to the dealer ........... and after making such enquiry as he considers necessary.'
4. If the impugned order relates to an 'escaped assessment', prima facie the same is barred. The Tribunals below have come to the conclusion that the order in question does not relate to any 'escaped assessment' and under any circumstances the same having been made on the basis of a voluntary return submitted by the assessee, it is not open to any challenge.
5. We may first dispose of the later contention, viz., that the assessment is valid as the same was made on the basis of voluntary return. This contention does not appear to be factually correct. As noticed earlier, the return made by the assessee was not accepted by the Assessing Authority and the assessment was made on the basis of 'best of judgment'. Therefore, the ratio of the decision in State of Madras v. M. P. Ibrahim Kunhi and Others : AIR1957Mad627 is inapplicable to the facts of the present case. Whether the petitioner could still be assessed on the basis of the return submitted by him is not a question that arises for decision in this case. Nor have we heard arguments on that point. Therefore, we do not propose to express any opinion on that point.
6. Several decisions were cited at the Bar for finding out the true scope of the expression 'for any reason the whole or any part of the turnover of business of a dealer has escaped assessment to the tax in any year'. We have not found it necessary to discuss those decisions in view of the decision of the Supreme Court in Commissioner of Income-tax, Bombay City v. Narsee Nagsee & Co., Bombay : 40ITR307(SC) . In that decision, their Lordships had to consider the true effect of section 14 of the Business Profits Tax Act, 1947, which, for our present purpose, is pari materia with rule 34(1). Therein, their Lordships held that :
'The words 'escaping assessment' apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason, no notice was issued to the assessee and, therefore, there was no assessment of his income.'
7. In the course of their judgment, their Lordships cited with approval the observations of Gajendragadkar, J., in Kamal Singh v. Commissioner of Income-tax : 35ITR1(SC) , which is as follows :
'We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been submitted, if the Income-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment. The appellant's attempt to put a very narrow and artificial limitation on the meaning of the word 'escape' in section 12(1)(b) cannot therefore succeed.'
8. The language employed in rule 34(1) appears to us to be much wider than the language employed in section 14 of the Business Profits Tax Act. Hence the ratio of the decision in the above cited case must apply with greater force to the facts of the present case.
9. In view of our above conclusions, we hold that the decision of the Sales Tax Appellate Tribunal is wrong and the same cannot be sustained. This revision petition is accordingly allowed and the order of assessment set aside. But in the circumstances of the case, there will be no order as to costs.
10. Petition allowed.