SIRSA INDUSTRIES Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) WHETHER the amount of money received as Central sales tax on his taxable turnover by an assessee under the I. T. Act in a particular accounting year, who follows the mercantile system of accounting and which amount has separately been credited to the Central Sales Tax account, though not actually paid to the State Government in that accounting year, can be added to the total income of the assessee for the accounting year by the ITO, is, inter alia, the significant question to be determined in this bunch of four writ petitions (Nos. 883, 2196, 2367 and 2376 of 1976 ).

(2.) MESSRS, Sirsa Industries, Sirsa, the petitioner-firm, is engaged in the business of cotton ginning and pressing factory at Sirsa, whereas the second petitioner-firm, M/s. Haryana Cotton Corporation, Sirsa, is doing business in cotton on commission basis. Both the firms are liable to pay Central sales tax on the sales of cotton. They have been collecting Central sales tax from their constituents on the sales of bales of cotton in the accounting years in dispute, but did not pay the same to the State Government. Both the petitioner-firms follow and have previously been following the mercantile system of accounts. The amounts realised as Central sales tax were credited to the Central sales tax account. This account along with other accounts was shown in the balance-sheets for all these years. The balance-sheets used to be attached with the income-tax returns for all these years. The ITO treated these amounts of Central sales tax as payable to the State Government and for that reason these amounts were not added to the total income of the petitioner-firms and assessments were completed for the years, in dispute, on that basis.

(3.) THE ITO, "a" Ward, Sirsa, issued three notices under Sections 154 and 155 of the I. T. Act (for short "the Act") to M/s. Sirsa Industries, Sirsa, petitioner-firm (hereinafter called "petitioner No. 1" for brevity sake) intimating that he intended to rectify mistakes in the assessment orders passed on 24th February, 1972, 14th March, 1972, and 22nd November, 1972, relating to the assessment years 1968-69, 1969-70 and 1970-71, respectively. These notices are the subject-matter of Civil Writ Petition No. 883 of 1976. Similarly, the ITO issued notices to this firm under Sections 147 and 148 of the Act, with regard to the assessment years 1971-72, 1972-73 and 1973-74, requiring petitioner No. 1 to deliver returns of income within 13 days as he had reasons to believe that income had escaped assessment within the meaning of Section 147 of the Act. These notices have been challenged in Civil Writ Petition No. 2196 of 1976. Similarly, two notices under Sections 147 and 148 of the Act regarding "the years 1972-73, 1973-74 and 1974-75 were issued to M/s. Haryana Corporation, Sirsa (hereinafter called "petitioner No 2. " ). It has filed Civil Writ Petitions Nos. 2367 and 2376 of 1976 for quashing these notices.