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Commercial Taxes Officer Vs. Ahmed Ali Kurbanali - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtRajasthan High Court
Decided On
Case NumberD.B.S.T. Reference No. 3 of 1982
Judge
Reported in[1986]63STC428(Raj)
AppellantCommercial Taxes Officer
RespondentAhmed Ali Kurbanali
Appellant Advocate K.C. Bhandari, Adv.
Respondent Advocate Rajendra Mehta, Adv.
Cases ReferredPunjab v. Aya Singh Ishar Singh
Excerpt:
.....juvenile under the said act. - 29,433.58. since the learned deputy commissioner (appeals) after the scrutiny was satisfied that the transactions worth rs. ) that the orders passed in revision by the single member as well as in special appeal by the division bench of the board holding that penalty should be imposed on the dealer-assessee under section 16(1)(n) of the act are erroneous in law. the approach made by the board in revision as well as in special appeal, in our opinion, was wrong as in the case on hand residuary provision contained in section 16(1)(n) of the act could not be applied, for that can only be attracted, if there is no specific provision in the act......section 12 of the rajasthan sales tax act, 1954 (no. 29 of 1954) ('the act') was issued to the dealer-assessee informing him regarding the reassessment of the business which has escaped assessment.3. the assistant commercial taxes officer, central division i, udaipur, found that the sales of motor parts, kerosene, diesel and petrol amounting to rs. 55,027.58 has escaped assessment. he, therefore, levied a tax of rs. 6,518.17. a penalty of rs. 13,000 under section 16(1)(e) of the act was also imposed. the dealer-assessee lodged an appeal against the order dated 4th december, 1976, by which the tax was levied and penalty was imposed. the deputy commissioner (appeals), commercial taxes, udaipur, by his order dated 28th january, 1978, maintained the levy of tax, but he reduced the.....
Judgment:

S.K. Mal Lodha, J.

1. The Board of Revenue for Rajasthan, Ajmer ('the Board' herein) has referred the following question of law for the opinion of this Court which is said to arise out of its order dated 7th July, 1980, passed in Special Appeal No. 13/79/RST/Udaipur:

Whether in the facts and the circumstances of the case an offence under Section 16(1)(e) of the Rajasthan Sales Tax Act, 1964, was made out and the penalty was wrongly directed to be imposed under Section 16(1)(n) of the said Act

2. The defendant-assessee (non-petitioner) was assessed to tax for the period 1st April, 1972, to 31st March, 1973, on 28th May, 1973, by the Commercial Taxes Officer, Circle B, Udaipur. The Assistant Commercial Taxes Officer, Central Division I, Udaipur, inspected the business premises of the assessee on 21st October, 1973. There he found a diary and some other documents. It appeared that certain transactions of sales and purchases relating to the period 1st June, 1973, to 20th October, 1973, were not entered in the duly assessed regular books of accounts. The Assistant Commercial Taxes Officer, Central Division I, Udaipur, seized the documents. A notice under Section 12 of the Rajasthan Sales Tax Act, 1954 (No. 29 of 1954) ('the Act') was issued to the dealer-assessee informing him regarding the reassessment of the business which has escaped assessment.

3. The Assistant Commercial Taxes Officer, Central Division I, Udaipur, found that the sales of motor parts, kerosene, diesel and petrol amounting to Rs. 55,027.58 has escaped assessment. He, therefore, levied a tax of Rs. 6,518.17. A penalty of Rs. 13,000 under Section 16(1)(e) of the Act was also imposed. The dealer-assessee lodged an appeal against the order dated 4th December, 1976, by which the tax was levied and penalty was imposed. The Deputy Commissioner (Appeals), Commercial Taxes, Udaipur, by his order dated 28th January, 1978, maintained the levy of tax, but he reduced the penalty under Section 16(1)(e) to Rs. 6,518.72.

4. Dissatisfied with the appellate order, the assessee filed a revision before the Board. The single Member of the Board by his order dated 15th February, 1979, accepted the revision and further reduced the penalty to the amount equal to the amount of tax which could have been levied on the transactions amounting to Rs. 29,433.58 only. The single Member of the Board in his order observed as under:

After reading the orders passed by the learned lower officers, I am also convinced that the transactions were in respect of purchases and sales made in Rajasthan and did not relate to purchases from outside Rajasthan calling for payment of tax. In other words it is not so much a case of evasion of tax as of maintaining wrong and misleading double accounts. For maintaining wrong accounts, penalty under a different provision of law, namely, under Section 16(1)(n) of the Rajasthan Sales Tax Act can be imposed. At the same time it is also clear that the Deputy Commissioner after a careful scrutiny has found that the transactions of Rs. 25,594.00 only were explained and the rest of the transactions should be held to have remained unexplained. The learned Counsel for the petitioner at this stage conceded that if any penalty at all was called for in the circumstances, it should be only in respect of the transactions worth Rs. 29,433.58. Since the learned Deputy Commissioner (Appeals) after the scrutiny was satisfied that the transactions worth Rs. 25,594.00 were tax-paid, penalty is to be imposed only for the transactions for the balance amount, namely, Rs. 29,433.58.

5. A special appeal was filed by the assessee and the Division Bench of the Board while agreeing with the single Member held that the penalty should be imposed under Section 16(1)(n) of the Act and reduced the amount of penalty to Rs. 1000. The penalty that was imposed under Section 16(1)(e) was set aside. An application for making reference to this Court was filed by the Commercial Taxes Officer (Revision), Ajmer. That application was allowed and the aforesaid question has been referred by the Board. This reference was pending on 1st May 1985, when the Rajasthan Sales Tax (Amendment) Act, 1984 (Act No. 20 of 1984) (for short 'the Amendment Act') came into force. By virtue of Section 13(11) of the Amendment Act this reference has been treated as revision under Section 15 of the Act as substituted by the Amendment Act.

6. We have heard Mr. K.C. Bhandari, learned Counsel for the Commercial Taxes Officer (Revision), Ajmer, and Mr. Rajendra Mehta for the dealer-assessee (non-petitioner) and carefully considered the orders of the assessing authority and also those passed in appeal.

7. We have to decide this revision on the question/questions of law, as envisaged by Section 15(3) of the Act as substituted by the Amendment Act.

8. It was strenuously contended by the learned Counsel for the assessee (sic.) that the orders passed in revision by the single Member as well as in special appeal by the Division Bench of the Board holding that penalty should be imposed on the dealer-assessee under Section 16(1)(n) of the Act are erroneous in law. This is stoutly opposed by the learned Counsel for the dealer-assessee.

9. Before the Division Bench of the Board, the following contentions were raised:

(i) that the single Member of the Board wrongly treated sales for Rs. 25,594 as having been of tax-paid goods and wrongly directed imposition of penalty only on the balance amount of Rs. 29,433.58;

(ii) that the assessee has committed an offence under Section 16(1)(e) of the Act and as such it was wrongly treated as an offence under Section 16(1)(n) of the Act.

10. The only question of law, therefore, that crops up for our consideration is whether on the facts and in the circumstances of the case, penalty is leviable on the dealer-assessee under Section 16(1)(e) of the Act. We may usefully read Section 16(1)(e) and Section 16(1)(n) of the Act which are as under:

16. Offences, penalties and prosecutions, etc.--(1) If any person--

(e) has concealed any particulars from any return furnished by him or has deliberately furnished inaccurate particulars therein; or

(n) wilfully acts in contravention of provisions of this Act, not otherwise provided for;

11. Reference to the aforesaid provisions is to those provisions which were in vogue at the relevant time. Section 16(1)(e) of the Act is attracted (i) where the dealer-assessee has concealed particulars from the return which has been furnished by him or (ii) the assessee has deliberately furnished inaccurate particulars in the return which he has filed.

12. So far as Section 16(1)(n) is concerned, it is applicable when the dealer-assessee acts in contravention of any of the provisions of the Act and if he acts wilfully in that regard, such contravention has been made punishable. In other words Section 16(1)(n) of the Act is a residuary provision for imposition of penalty.

13. Now, let us advert to the facts regarding which there is no dispute. On the basis of the return filed by the dealer-assessee, assessment was made in respect of the period 1st April, 1972, to 31st March, 1973. After the completion of the assessment, it was on 21st October, 1973, that on inspection of the business premises by the Assistant Commercial Taxes Officer, Anti Evasion I, Udaipur, diary and some documents of the dealer-assessee were found which contained certain transactions of sales and purchases which were in respect of the period 1st January, 1973, to 20th October, 1973. The aforesaid transactions pertaining to the aforesaid period were not entered in the account books of the dealer-assessee. The diary and the documents were seized by the Assistant Commercial Taxes Officer. It was on the basis of the books of accounts that the dealer-assessee filed the return and it was on their basis that the initial assessment was completed on 28th May, 1973. The transactions contained in the diary and the documents that were seized by the Assistant Commercial Taxes Officer, Anti-Evasion I were not disclosed in the return that was filed by the dealer-assessee, on the basis of which, the assessment was completed on 28th May, 1973. In other words, the return that was filed by the dealer-assessee in respect of the aforesaid period did not contain the transactions of the diary and the documents that were seized, and so the transactions contained in the diary and the documents were concealed by not disclosing them in the return. It follows, therefore, that the dealer-assessee concealed the particulars of the turnover in the return that he filed, or in other words, he did not disclose the correct turnover by mentioning the transactions that were contained in the diary and the documents. He supplied inaccurate particulars of the transactions relating to the turnover of the period in question in the return. To such a situation, express provision for imposition of penalty has been made in Section 16(1)(e) of the Act, and when Section 16(1)(e) is applicable it is futile to contend that the residuary provision contained in Section 16(1)(n) applies. We have, therefore, no hesitation in holding that the single Member of the Board in revision and the Division Bench of the Board in special appeal misdirected themselves in law when they opined that as the dealer-assessee did not mention the transactions contained in the diary and the documents seized by the Assistant Commercial Taxes Officer, Anti Evasion I, he has wilfully contravened the provisions of the Act which enjoined upon him to correctly enter all the transactions of the business done by him in the regular books of accounts. The approach made by the Board in revision as well as in special appeal, in our opinion, was wrong as in the case on hand residuary provision contained in Section 16(1)(n) of the Act could not be applied, for that can only be attracted, if there is no specific provision in the Act. The matter does not rest at that. Section 16(1)(e) is in pari materia with Section 271(1)(c) of the Income-tax Act, 1961 (Act No. XLIII of 1961) ('the Act of 1961' hereinafter). We may further mention that the two expressions with which we are concerned have also been used in Section 271(1)(c) of the Act of 1961. The two expressions 'concealed any particulars' and 'furnished inaccurate particulars' therein are the same as used in Section 271(1)(c) of the Act of 1961. Of course, in the second part of Section 16(1) (e) of the Act the word 'deliberately' has been used. This was omitted in Section 271(1)(c) of the Act of 1961. The matter relating to the imposition of penalty was examined by their Lordships of the Supreme Court in Commissioner of Income-tax, West Bengal I, v. Anwar Ali : [1970]76ITR696(SC) wherein Section 28(1) (c) of the Indian Income-tax Act, 1922, was considered. It was held therein that before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented the income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. Commissioner of Income-tax, West Bengal I, and Another's case : [1970]76ITR696(SC) was followed in Anantharam Veerasinghaiah & Co. v. Commissioner of Income-tax : [1980]123ITR457(SC) . These two decisions were considered by the Division - Bench of this Court to which one of us (S.K. Mal Lodha, J.) was a party in Murarilal Ahuja & Sons v. Board of Revenue [1986] 61 STC 393 (D.B. Sales Tax Case No. 31 of 1984 under Section 15(2) and (3) of the Act decided on 27th August, 1985). The question involved was that of imposition of penalty under Section 16(1)(e) of the Act. It was observed as under:

So having regard to the language used in Section 271(1)(c) which is more or less the same as used in Section 16(1)(e) of the Act, it is abundantly clear that before levying penalty under Section 16(1)(e) of the Act all the circumstances of the case have to be taken into consideration in the penalty proceedings and if from those circumstances conscious concealment or deliberate furnishing of inaccurate particulars are established then and then only penalty can be imposed. Having regard to the finding' of the Board on the question relating to penalty under Section 16(1)(e) of the Act, we are of the opinion that the Board has not given its pointed attention to this aspect of Section 16(1)(e) that either there should be conscious concealment or there should be deliberate furnishing of inaccurate particulars in the return.

14. In Murarilal Ahuja & Sons' case (D.B. Sales Tax Case No. 31 of 1984 decided on 27th August, 1985), Commissioner of Income-tax v. Ramdas Pharmacy : [1970]77ITR276(Mad) and J.P. Sharma and Sons v. Commissioner of Income-tax, Rajasthan were considered. The latter case is of this Court. As the Board in the special appeal reached the conclusion that Section 16(1)(n) is applicable for the imposition of penalty on the dealer-assessee, it had no occasion to consider the entirety of the circumstances of the case, for the purpose of imposition of penalty under Section 16(1)(e) of the Act.

15. In these circumstances, further question that arises is what course should be adopted in this case. In Commissioner of Income-tax, Punjab v. Aya Singh Ishar Singh the case was sent back to the Income-tax Appellate Tribunal with the direction to examine the question whether the concealment was not conscious or that the assessee had not deliberately furnished inaccurate particulars of his income in the return in view of the legal principles enunciated fn Commissioner of Income-tax, West Bengal I's case : [1970]76ITR696(SC) . This decision was followed in Murarilal Ahuja & Sons' case D.B. Sales Tax Case No. 31 of 1984 decided on 27th August, 1985. Without expressing any opinion on the question of imposition of penalty under Section 16(1)(e) of the Act, we consider it proper to send the case back to the Sales Tax Appellate Tribunal, Ajmer, constituted under Section 2A of the Act as inserted by Section 2 of the Amendment Act, for redetermining the revision and decide the question of levy of penalty and its quantum, if necessary, in accordance with law.

16. The orders dated 15th February, 1979, of the single Member of the Board and dated 7th July, 1980, of the Division Bench of the Board are set aside. We further direct the Sales Tax Appellate Tribunal, Ajmer, to redetermine the revision and decide the question of levy of penalty and its quantum in the light of the observations made hereinabove and keeping in view the principles enunciated in Commissioner of Income-tax, West Bengal I : [1970]76ITR696(SC) , Murarilal Ahuja & Sons D.B. Sales Tax Case No. 31 of 1984 decided on 27th August, 1985 and /. P. Sharma and Sons cases relating to the imposition of penalty. The parties will be afforded an opportunity of hearing. The reference which has been treated and heard as revision is accordingly disposed of. In the circumstances of the case, we leave the parties to bear their own costs.


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