K LAKSHMANASWAMI CHETTIAR Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THIS is an appeal filed under section 37 of the Tamil Nadu General Sales Tax Act, 1959, against the order of the Board of Revenue dated 29th November, 1975. For the assessment year 1966-67, the assessee was assessed on a taxable turnover of Rs. 9, 51, 739. 76 by an order dated 12th January, 1968. While checking the accounts for 1970-71, it was found that the assessee had shown lesser purchases and sales by undertotalling the purchases and sales in the ledger. On 17th March, 1972, the assessing authority issued a notice to the dealers in form XII to produce their accounts for 1966-67 on 21st March, 1972. The assessee did not produce the accounts. The assessing authority again issued a notice on 25th March, 1972, to produce the accounts. Again the assessee did not comply. In a further notice on 25th March, 1972, the assessing authority wrote again saying that there was every reason to suspect that the turnover reported in form A-2 for 1966-67 did not represent the correct turnover and that from the records of the subsequent assessment years, it was seen that the assessee had suppressed monthly Rs. 10, 000 under taxable and Rs. 5, 000 under exempted goods. Since the assessee had not produced the accounts to prove the correctness of the turnover already reported, the assessing authority proposed to estimate the turnover that had escaped assessment and also to levy penalty. The proposed addition to the turnover was Rs. 1, 20, 000 and the proposed levy of penalty was Rs. 500.

(2.) THE notice was despatched on 27th March, 1972, by registered post and as shown by the acknowledgment received from the post office, the assessee got it on 3rd April, 1972. THE assessee was granted time up to 11th April, 1972, to give the reply to this notice. THE assessee's objection was that the revision of assessment was time-barred on 31st March, 1972. THE assessing authority rejected this contention and passed an order on 7th June, 1972, adding Rs. 1, 20, 000 to the turnover and levying Rs. 4, 500 as penalty.THE assessee appealed to the Appellate Assistant Commissioner, who held that the notice proposing revision having been served only on 3rd April, 1972, the revision itself was beyond the period of limitation of 5 years prescribed under section 16 of the Act. THE Board considered that the order of the Appellate Assistant Commissioner was not correct and required to be set aside and, therefore, took up suo motu revision proceedings. In those proceedings the assessee's objection was again that the reassessment was time-barred. After referring to some of the decisions on the point, the Commissioner of Commercial Taxes held that for the purpose of computing the period of limitation, it was enough if the proceedings were initiated and that such proceedings need not have been completed before the expiry of the period prescribed under section 16. THE result was that the order of the Appellate Assistant Commissioner was set aside and the order of the assessing authority restored. THEre is no discussion on the correctness of the addition or on the quantum of the penalty levied.

(3.) THE result was that the Supreme Court confirmed the validity of the assessment even though the assessment was actually completed beyond the period of three years mentioned in rule 33. This judgment of the Supreme Court was considered and applied in Anglo French Textiles Limited, Pondicherry v. State of Tamil Nadu represented by the Deputy Commercial Tax Officer, Madurai [W.P. Nos. 3939 to 3941 of 1971 decided on 14th March, 1972 (Madras High Court)]. In that case, the assessment years under consideration were 1963-64, 1964-65 and 1965-66. As the assessee had not furnished the return and as there was information to show that the assessee had purchased cotton from some dealers in Rajapalayam and that delivery of cotton was effected in Rajapalayam itself during the year 1965-66, a notice was issued by the assessing authority on 11th September, 1968, requiring the assessee to furnish particulars on or before 25th September, 1968, of the cotton purchases in the State of Madras between 1963-64 and 1967-68. THEse particulars were furnished on 23rd September, 1968. After checking them, a pre-assessment notice was issued on 24th March, 1969, proposing to fix the taxable turnover at a particular figure and also to levy a penalty for the assessment year 1963-64. This notice was served on the assessee on 31st March, 1969. After obtaining time for filing their objections, the assessee objected in its letter dated 12th April, 1969, to the proposal stating that the transactions were inter-State sales and they were not liable to pay sales tax. THE assessee thereafter came before this Court by filing writ petitions in so far as the notice related to the assessment years 1963-64 to 1965-66 on the ground that the assessing authority had no jurisdiction to take any proceedings or pass any order under section 16 of the Act after the expiry of a period of 5 years from the year to which the tax related.