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R.S. Narayana Shenoi Vs. State of Kerala - Court Judgment

LegalCrystal Citation
Subject Sales Tax
CourtKerala High Court
Decided On
Case Number Tax Revision Case No. 50 of 1960
Judge
Reported in[1961]12STC665(Ker)
AppellantR.S. Narayana Shenoi
RespondentState of Kerala
Appellant Advocate V. Rama Shenoi and; R. Raya Shenoi, Advs.
Respondent AdvocateThe Government Pleader
Disposition Petition dismissed
Cases ReferredMaharaj Kumar v. Income
Excerpt:
- - the appeal to the tribunal has been unsuccessful, and, therefore, this revision petition. this would be the natural and normal meaning of the expression 'turnover which has escaped' in rule 17(1). 3. the aforesaid observations are entitled to great weight when determining the limits of the powers conferred by rule 33(1) of the travancore-cochin general sales tax rules as well, which is similarly worded. as there is nothing in the context of rule 33 to suggest the use of the words 'escaped assessment' having been given limited meaning, the reasons, on which escaped assessment of income been construed not to be limited, would equally apply to not limiting escaped assessment of turnover to cases -of inadvertence, oversight, or failure to submit the returns......which is similar to rule 33 under the kerala rules, has been held to authorise reopening of only escaped turnover, and not to extend to illegal assessment. in further support of this argument, he relies on kondapalli viraraju v. state of andhra [1958] 9 s.t.c. 42, at p. 52 where the distinction drawn by the learned judges of the madras high court has been followed. the passage in louis dreyfus' case1, on which particular emphasis has been laid before us, is at page 329, and reads as follows:- the language of rule 17(1) is consistent with this construction. the 'escape' that serves as the foundation of the jurisdiction to reopen an assessment is that of 'turnover' and not, be it noted, an assessment. 'turnover' escapes when it is not noticed by the officer either because it is not.....
Judgment:

M.A. Ansari, C.J.

1. The revision petitioner had been conducting oil mills at Vypeen under the name and style of 'Vypeen Oil Mills'. That is his family business, and consists of purchasing and converting copra into coconut oil and cake and selling within the State and outside, the coconut oil and cake so manufactured. The Sales Tax Officer had for the assessment year 1951-52 found the taxable turnover to be Rs. 2,60,644-11-3, excluding the price of copra, whose oil has been sold outside Kerala State. Subsequently, he began proceedings to reopen and enhance the assessment; and by a fresh order of 12th June, 1954, found the turnover to be Rs. 6,89,809-15-3, on which the tax held payable came to Rs. 10,788-5-0, whereas the earlier tax had amounted to Rs. 4,072-9-0. The order enhancing the turnover has been objected to on the ground of being beyond the authority of the officer ; but the ground was rejected by the Appellate Assistant Commissioner, who has held that the officer had acted within the power conferred on him by Rule 33 of the General Sales Tax Rules. The appeal to the Tribunal has been unsuccessful, and, therefore, this revision petition.

2. The revision petitioner's learned Advocate has pressed the argument that the rule, on which the appellate authorities rely, does not authorise assessment being reopened by the taxing authority, because of some legal error having been committed, where the order had been passed with due care and without any part of the turnover having been concealed. In support he relies on State of Madras v. Louis Dreyfus and Company Ltd. [1955] 6 S.T.C. 318 where Rule 17 of the Madras General Sales Tax Rules, which is similar to Rule 33 under the Kerala Rules, has been held to authorise reopening of only escaped turnover, and not to extend to illegal assessment. In further support of this argument, he relies on Kondapalli Viraraju v. State of Andhra [1958] 9 S.T.C. 42, at p. 52 where the distinction drawn by the learned Judges of the Madras High Court has been followed. The passage in Louis Dreyfus' case1, on which particular emphasis has been laid before us, is at page 329, and reads as follows:-

The language of Rule 17(1) is consistent with this construction. The 'escape' that serves as the foundation of the jurisdiction to reopen an assessment is that of 'turnover' and not, be it noted, an assessment. 'Turnover' escapes when it is not noticed by the officer either because it is not before him by reason of an inadvertence, omission or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer the turnover, though in the books, has not been taken notice of. This would be the natural and normal meaning of the expression 'turnover which has escaped' in Rule 17(1).

3. The aforesaid observations are entitled to great weight when determining the limits of the powers conferred by Rule 33(1) of the Travancore-Cochin General Sales Tax Rules as well, which is similarly worded. Yet we respectfully do not agree with the observation ; for, it is clear that the words 'escaped assessment' in Section 34(1)(b) of the Indian Income-tax Act have been differently interpreted in Maharaj Kumar v. Income-tax Commissioner [1959] 35 I.T.R. 1 where Gajendragadkar, J., has thus observed at page 262 :-

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.

4. The aforesaid conclusion cannot be confined to assessments under the Income-tax Act alone, because it has been rested on the dictionary meaning of the word 'escape', which is held also to mean 'to get clear away from (pursuit or pursuer) ; to succeed in avoiding (anything painful or unwelcome)'. The learned Judge has, therefore, observed, that, judging by the dictionary meaning alone, it would be difficult to confine the meaning of the word 'escape' only to cases, where no return has been submitted by the assessee, or even where the assessee had submitted a return of his income and the whole of the income has not been assessed. As there is nothing in the context of Rule 33 to suggest the use of the words 'escaped assessment' having been given limited meaning, the reasons, on which escaped assessment of income been construed not to be limited, would equally apply to not limiting escaped assessment of turnover to cases -of inadvertence, oversight, or failure to submit the returns. We, therefore, think the limitation on the word 'escape' placed by the learned Judges of the Madras High Court not to be applicable to Rule 33, because that is not justified either by the dictionary meaning of the word, nor by the opening wording of the rule, where the framers have used the words 'any reason'. It follows that the jurisdiction under the rule is not confined to cases where the turnover has escaped assessment, due to its not being before the officer by reason of inadvertence, omission, or deliberate concealment on the part of the assessee, or because of want of care on the part of the officer. In these circumstances, the judgment of the Appellate Tribunal is correct, and the revision petition is accordingly dismissed with costs, Advocate's fee Rs. 100.


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