PANCHHI PETHA STORE Vs. STATE OF U P

JUDGEMENT

(1.) THE factual matrix of the case as set out in the writ petition is that for the assessment year 1981-82, the Sales Tax Officer passed the assessment order on August 6, 1984. Being aggrieved against the said order the petitioner preferred an appeal which was dismissed on January 18, 1985 by the Assistant Commissioner (Judicial), Sales Tax. THEreafter a second appeal was filed before the Sales Tax Tribunal. While the appeal was pending, the Deputy Commissioner (Executive), Sales Tax, Agra Region, Agra issued two notices purporting to be under section 10-B of the U. P. Sales Tax Act, 1948; one notice was under the U. P. Sales Tax Act and the other was under the Central Sales Tax Act, 1956. Mr. Bharatji Agarwal, learned counsel for the petitioner, submitted that in view of the provisions contained in section 10-B (3) of the Act, on order under sub-section (1) can be passed to revise the order which is or has been the subject-matter of appeal under section 9, or an order passed by the appellate authority under that section. To support his contention he relied upon a judgment in M. R. Soap (Pvt.) Ltd. v. Assistant Commissioner (Assessment), Sales Tax, Modinagar, Ghaziabad reported in 1991 UPTC 517, wherein a Division Bench of this Court relying upon a decision in J. K. Synthetics Ltd. v. Additional Commissioner of Income-tax reported in [1976] 105 ITR 344, wherein an identical provision of Income-tax-Act was in issue before the court, observed as under : " THE submission is amply supported both by the scheme of the statute as well as authoritative pronouncements on the subject. In J. K. Synthetics Ltd. v. Additional Commissioner of Income-tax reported in 1974 UPTC 479; [1976] 105 ITR 344, a Division Bench of this Court had occasion to consider an identical question arising in the setting of section 251 of the Income-tax Act, 1961, which is in pari materia with the corresponding provision of the U. P. Sales Tax Act, viz. , section 9 (3) of the U. P. Sales Tax Act. In that case the validity of the notice issued by the Commissioner to revise a decision of the Income-tax Officer was challenged by way of a petition on the ground that the order of assessment passed by the Income-tax Officer having merged in the appellate order passed by the Appellate Assistant Commissioner, the Commissioner of Income-tax was not competent to revise the decision of the Income-tax Officer even though the attempt of the Assistant Commissioner to reopen the assessment order was with respect to a matter which was not the subject-matter of appeal before the Appellate Assistant Commissioner. What had happened was that the J. K. Synthetics had claimed to be a petro-chemical industry, to which section 33 (1) (b) (B) (i) of the Income-tax Act was applicable. Asserting that it was a priority industry, the company claimed that it was entitled to depreciation under section 80-E of the Act. THE Income-tax Officer, however, disallowed certain deductions claimed by the petitioner against which the company filed an appeal which was partly allowed by the Appellate Assistant Commissioner with the result that the assessment was modified. THEreafter the Additional Commissioner of Income-tax issued the impugned notice to the company under section 263 of the IT Act intimating that he intended to revise the order of the Income-tax Officer on the ground that the depreciation was wrongly allowed to the company at the rate of 35 per cent instead of 20 per cent as, according to the Commissioner, company was not a priority industry. It was in this statutory setting that an objection was raised before the Commissioner on behalf of the company challenging his jurisdiction on the ground that the order of the Income-tax Officer having merged in the order of the Appellate Assistant Commissioner, the Commissioner had no jurisdiction under section 261 (1) (as it then stood) to revise the order passed by the Income-tax Officer. THE notice was sought to be supported on behalf of the Revenue on the ground that since the points decided by the Income-tax Officer in favour of the assessee were not the subject-matter of appeal, the decision of the income-tax Officer on the points decided in favour of the assessee could not be said to have merged in the appellate order. " It was further indicated : " It will thus be seen that the jurisdiction of the appellate authority under section 9 (3) is of the widest possible amplitude. THE appellate authority cannot only confirm, very or annual the order of assessment but may even enhance the amount of assessment, irrespective of whether such enhancement arises from the points raised in the grounds of appeal or otherwise considered by the assessing authority. THE appellate power under this provision, is, as observed by the learned Chief Justice Chagla in Narrondas Manordass [1957] 31 ITR 909 (Bom) in the nature of the power of revision, and as observed by the Supreme Court in [1967] 66 ITR 443 at 449 (SC) (Commissioner of Income-tax v. Rai Bahadur Hardutroy Motilal Chamaria), it would be wholly erroneous to compare such appellate powers with the narrow and restricted power possessed by a court of appeal under the Code of Civil Procedure. That being so, the entire assessment order, whether challenged in appeal as a whole or only in part, will merge in the appellate order irrespective of the points urged by the parties or decided by the appellate authority. " We respectfully agree with the law laid down by the Division Bench in the aforementioned cases. We are definitely of the view that even if the matter which is subject to the notice was not subject to the assessment order or the appellate order, even then the order cannot be revised under section 10-B of the U. P. Sales Tax Act. In case there was any matter which escaped assessment to tax, proceedings under section 21 of the U. P. Sales Tax Act could be initiated against the petitioner. Under section 10-B fresh proceeding cannot be initiated for the assessment year 1981-82 which was subject to the assessment orders passed by the Sales Tax Officer and the order passed by the first appellate authority. On August 5, 1988, a Division Bench of this Court passed an interim order to the effect that subject to further orders of this Court proceedings under section 10-B of the U. P. Sales Tax Act for the assessment year 1981-82 may continue but no final orders would be served on the petitioners. Learned Standing Counsel has drawn the attention of this Court that on May 5, 1988, the Deputy Commissioner (Executive), Sales Tax, passed order under section 10 of the U. P. Sales Tax Act. In view of the order of this Court the order might not have been served on the petitioner. THE order passed was subject to the final orders, which we would be passing in this writ petition. Hence that order has no relevance for purposes of deciding this case. In view of what we have indicated hereinabove, the writ petition succeeds. A writ in the nature of certiorari quashing the notices dated July 11, 1988, contained in annexures 7 and 8 to the writ petition under section 10-B of the U. P. Sales Tax Act and the proceedings thereon in issued. Writ petition allowed. .