D.K. Sen, J.
1. Ramanlal Madanlal, the petitioner in this application, is a partnership firm registered under the Indian Partnership Act, 1932. The petitioner is also registered as a dealer under the Bengal Finance (Sales Tax) Act and the Central Sales Tax Act and carries on business, inter alia, of sale of condemned stores and disposal materials including heavy machinery, tractors, cranes, trailers, road-rollers, etc.
2. For the period of four quarters ending December, 1965, the petitioner was assessed to sales tax. In the proceedings some of the petitioner's books were produced, the other books, having been seized by the income-tax department, the petitioner's accounts could not be closed. Under the circumstances, the Commercial Tax Officer rejected the return of the petitioner where the gross turnover was shown to be Rs. 2,08,071.75, and the gross turnover was estimated to the best of his judgment at Rs. 3,00,000.
3. Being aggrieved by the said assessment dated 29th September, 1967, the petitioner preferred an appeal before the Assistant Commissioner of Commercial Taxes and obtained substantial relief.
4. Thereafter, the Commercial Tax Officer-cum-Investigating Officer, Bureau of Investigation, respondent No. 1 herein, issued three several memoranda respectively dated 20th September, 1971, 25th September, 1971, and 7th October, 1971, under Section 14(1) of the Bengal Finance (Sales Tax) Act directing the petitioner to appear with all the books of account for the years ending 1964, 1965 and 1966. Pursuant to the aforesaid, the petitioner's representative attended the office of respondent No. 1 on 24th September, 1971, and 29th October, 1971, with its books of account. On 29th October, 1971, respondent No. 1 seized the following six books produced by the petitioner :
(a) Two rokars for the year 1965-66.
(b) Two nakals for the year 1965-66.
(c) Two khatas for the year 1965-66.
5. Respondent No. 1 also issued a seizure receipt as follows :
As I have reasons to suspect that M/s. Ramanlal Madanlal of 56, Burtolla Street (JK/2642A) is attempting to evade payment of tax under the Bengal Finance (Sales Tax) Act, 1941, I/we have seized the following accounts and records of the said dealer from...under Section 14(3) of the said Act, as these are considered to be necessary for the purpose of taking action under the provisions of the said Act.
6. Narayandas Phumra, a partner of the petitioner, was purported to be examined by respondent No. 1 on the same day as also on 11th November, 1971, when his statements were recorded.
7. Therafter, respondent No. 1 again issued three notices, all dated 24th November, 1971, individually to the said Narayandas Phumra, as also Daulal Phumra and Ramanlal Phumra, two other partners of the petitioner, under Section 14(1) of the Bengal Finance (Sales Tax) Act, 1941, stating, inter alia, as follows :
You are hereby directed under Section 14(1) read with Section 21A of the Bengal Finance (Sales Tax) Act, 1941, to produce all the relevant records of your personal business since 1st January, 1964, to the date of production on 27th December, 1971, at 11 A.M. before the undersigned positively for examination.
8. The said Narayandas Phumra, Daulal Phumra and Ramanlal Phumra replied to the said notices on 27th December, 1971, stating, inter alia, that they were only the partners of the firm and that some of the books of the petitioner were already in the custody of respondent No. 1.
9. In answer thereto, respondent No. 1 issued a letter dated 3rd January, 1972, addressed to the said Daulal Phumra and Ramanlal Phumra stating, inter alia, as follows :
In this connection you are again directed to submit before the undersigned on 7th January, 1972, at 1 P.M. your personal account in support of the contention as per notice dated 24th November, 1971. You are requested to submit the account of the amount disclosed by you which was earned by you individually from sources other than the business carried on under the partnership firm M/s. Ramanlal Madanlal. Failure to comply with this notice would be deemed to disprove your contention and the entire amount disclosed would be treated as undisclosed business earning and action will be taken accordingly without further notice to you in the matter.
10. The said partners, namely, Daulal Phumra and Ramanlal Phumra, replied to the said notices by their letters dated 7th January, 1972, contending, inter alia, that the firm M/s. Ramanlal Madanlal was not their business and that the income disclosed under Section 68 of the Finance Act related to a period prior to 1961 and would not come within the mischief of the provisions of the Bengal Finance (Sales Tax) Act.
11. Respondent No. 1 issued a further notice to the said three partners of the petitioner, namely, Narayandas Phumra, Daulal Phumra and Ramanlal Phumra, all dated 13th January, 1972, as follows :
You are hereby directed under Section 14(1) read with Section 21A of the Bengal Finance (Sales Tax) Act, 1941, to produce all the relevant records of your personal business since 1st January, 1964, to the date of production on 3rd February, 1972, at 11 A.M. before the undersigned positively for examination.
12. Finally, on 28th November, 1972, the Additional Commissioner of Commercial Taxes, West Bengal, issued a notice on the following terms :
Sri Narayandas Phumra, Partner, and others carrying on business under the trade name of M/s. Ramanlal Madanlal, 56, Burtolla Street, Calcutta.
Whereas it is proposed to pass an order to the effect mentioned below, you are hereby informed that if you wish to prefer any objection against such order you should attend either personally or by an authorised agent for that purpose at the office of the undersigned at 14, Beliaghata Road, Calcutta-15, on the 5th day of January, 1973, at 11 A.M.
Signed (U. Basu)28th November, 1972.Designation: Additional Commissioner,Dated.... Commercial Taxes, West Bengal.Gist of the order proposed to be passed :-There has been a disclosure of income of Rs. 11.05 lacs by the 5 partners as made on 31st May, 1965. Such disclosure being income arising out of the business of the firm and such sales having not been recorded in the books during the years 1963, 1964 and 1965 it is considered necessary to revise the appellate order bearing Appeal Case No. A338/69-70 of the Assistant Commissioner, Calcutta (North) Circle, in respect of the period for 4 quarters ending 1965 by enhancing the gross turnover and taxable sales by Rs. 36,83,333.00.
13. The petitioner being aggrieved by the said notice dated 28th November, 1972, has challenged the same in the present application. The petitioner contends that on 31st May, 1965, the partners of the petitioner made voluntary disclosure of their undisclosed income which they had earned in their individual capacity under Section 68 of the Finance Act, 1965. The petitioner's case is that the particulars of the amounts disclosed were not available and that the said amounts had been earned in various ways and during a long period of time. The amounts were invested and reinvested in various firms in business and/or transactions and invested in the name of third parties in the petitioner's firm as also in other firms. The income so disclosed related to a period prior to 1961. The disclosures were duly accepted by the Commissioner of Income-tax and a certificate under Section 68(7) of the Finance Act, 1965, has been given to the partners and taxes on such disclosures have been paid.
14. The petitioner contends that the said notice dated 28th November, 1972, issued by the Additional Commissioner of Commercial Taxes, West Bengal, is illegal, invalid and inoperative as also without jurisdiction as such disclosure did not constitute valid material for the purpose of assessment or reassessment of sales tax for the period in question. It is further contended that declarations made under the provisions of Section 68 of the Finance Act, 1965, and the proceedings thereunder are confidential and no public servant including the Commissioner of Income-tax before whom the declaration might be made would be entitled to disclose the particulars contained in such declaration and the same would not be admissible as evidence against the petitioner for the purpose of assessment under the Bengal Finance (Sales Tax) Act. It is contended that the Additional Commissioner of Commercial Taxes initiated a roving and fishing investigation without any valid material and wrongly assumed jurisdiction in the matter. It is also contended that no sanction was obtained either from the Assistant Commissioner of Commercial Taxes or from the Commissioner of Commercial Taxes for retaining the books and documents seized from the petitioner beyond the prescribed period. In any event, no communication has been sent to the petitioner in respect of such sanction, if any.
15. On the grounds as aforesaid, the petitioner moved this Court and the rule nisi herein was issued on 28th February, 1973, calling upon the respondents namely, S. K. Chatterjea, Commercial Tax Officer-cum-Investigating Officer, Bureau of Investigation; the Additional Commissioner, Commercial Taxes, West Bengal; the Commercial Tax Officer; and the State of West Bengal, to show cause why appropriate writs should not be issued directing them to act according to law and to recall and withdraw the impugned notice issued by the Additional Commissioner of Commercial Taxes, West Bengal, dated 28th November, 1972, to refrain from taking any steps thereunder and for setting aside or quashing the same.
16. The application is opposed but no affidavit has been filed on behalf of the respondents controverting the allegations in the petition.
17. The learned Advocate appearing for the petitioner reiterated the contentions in the petition and in support thereof cited a decision of the Supreme Court in Girdhari Lal Nannelal v. Sales Tax Commissioner, M.P. A.I.R. 1977 S.C. 298. In the case before the Supreme Court the sales tax assessing authority of Madhya Pradesh had added an amount of Rs. 10,000 which had been entered by way of cash credit in the account books of the dealer concerned in the name of the wife of a partner. The assessing authority treated the said amount as the income of the appellant out of concealed sales and adopting a rate of 10 per cent as the rate of profit, the turnover in respect of this amount was determined to be rupees one lakh which was added to the gross turnover. On appeal, the contention of the assessee that the amount was a gift by the partner to his wife before marriage was rejected. The same view was taken by the Board of Revenue and the High Court. When the matter came up on appeal before the Supreme Court, it was held that the judgment of the High Court could not be sustained. The entry in the account books of the dealer showing a credit of Rs. 10,000 was no doubt in the name of the wife of one of the partners but in order to impose liability upon the dealer for payment of sales tax by treating the amount as profits arising out of undisclosed sales it had to be established that the amount was the income of the dealer and not the person in whose name it was entered and that the said amount represented profits from income realised as a result of transactions liable to sales tax. The onus to prove the same was upon the sales tax authority. The Supreme Court went on to observe further as follows :
The approach which may be permissible for imposing liability for payment of income-tax in respect of the unexplained acquisition of money may not hold good in sales tax cases. For the purpose of income-tax it may in appropriate cases be permissible to treat unexplained acquisition of money by the assessee to be the assessee's income from undisclosed sources and assess him as such. As against that, for the purpose of levy of sales tax it would be necessary not only to show that the source of money has not been explained but also to show the existence of some material to indicate that the acquisition of money by the assessee has resulted from transactions liable to sales tax and not from other sources.
18. The law as settled by the Supreme Court appears to be clear. On a challenge being thrown by a dealer in the instant case, the sales tax authority has not been able to produce any material to justify the notice except the fact that the partners of the firm in their individual capacity have disclosed certain amounts as their income before the income-tax authority. In my view, this is not sufficient for the sales tax authority to embark upon a reassessment. I also note that the allegations in the petition that the said income arises prior to 1961 and can in no event be subject of assessment in the assessment year 1964, 1965 or 1966 have not been controverted by the respondents. No submission was made by the learned Advocate appearing on behalf of the sales tax department to justify the notice nor any answer was given to the point raised that the confidential disclosure made before the income-tax authority could not be used by the sales tax department and taken advantage of.
19. For the reasons as aforesaid the petitioner succeeds in this application. A writ in the nature of mandamus will issue directing the respondents not to give any or any further effect to the said impugned notice dated 28th November, 1972. A writ in the nature of prohibition will also issue commanding the respondents not to take any or any further steps pursuant to the said impugned notice. There will be a further direction upon the respondents to return the books and documents of the petitioner which are lying seized in their custody since 1972. The said books should be returned within four weeks from date.
20. The rule is made absolute to the extent as aforesaid.
21. There will be no order as to costs.
22. This order will be stayed for four weeks from date.