Assistant Commissioner, Works Contract and Leasing Tax-II, Jaipur vs R.S. Electricals

Alok Sharma J.

This revision petition challenges the order dated November 10, 2003, passed by the Rajasthan Tax Board, Ajmer, setting aside the order dated December 14, 2001, passed by the Deputy Commissioner (Appeals), Commercial Taxes, Kota, upholding the order of assessment dated June 22, 1998, whereunder the assessing authority u/s 12 of the RST Act, 1954 (hereinafter "the Act of 1954") had levied tax, interest (under section 11B(f) of the Act) as also penalty (under section 7AA of the Act) on the respondent-assessee for the assessment years 1991-92 and 1992-93.

The facts of the case are that the respondent-assessee as a contractor submitted returns for the assessment years 1991-92 and 1992-93 disclosing, inter alia, its taxable turnover including the profit accrued to it during the two assessment years. The assessing authority proceeding u/s 10 of the Act of 1954 passed assessment orders dated December 7, 1993 (for the year 1991-92) and June 29, 1994 (for the year 1992-93). The assessment orders did not include the amount of profit disclosed by the contractor for both the years in the taxable turnover as the assessing authority was of the view at the relevant time that the profit earned by the contractor was exempted from tax under law. However, following the judgment of the honourable Supreme Court in Gannon Dunkerley and Co. and Others Vs. State of Rajasthan and Others, , the learned assessing authority issued notices to the respondent-assessee on December 5, 1997 in both the cases u/s 12 of the Act of 1954 for reopening the earlier assessments for both the relevant years and reassessed the contractor to tax on the amount of profit also. Consequential interest was also charged on the amount of the tax assessed for the period for which it having been remained unpaid. Penalty u/s 7AA of the Act of 1954 was also levied. An appeal against the order of the assessing authority also failed before the Deputy Commissioner.

The learned Tax Board taking into consideration the facts of the case noted that the case before the assessing authority as also appellate authority determined by their orders dated June 22, 1998 and December 14, 2001, respectively, was not one of escaping of assessment, but one of error of judgment by the assessing authority in the first instance. In this view of the matter, relying on the judgment of the honourable Supreme Court in the case of State of Kerala Vs. K.E. Nainan, , the Tax Board held that the profits of the contractor having been disclosed in the returns filed and the assessing authority having made an error of judgment in the first instance, reopening of the assessment orders passed on December 7, 1993 and June 29, 1994 for tax escaping assessment could not have been resorted to by invoking section 12 of the Act of 1954. It was held that an error of judgment in the assessment, made in spite of material disclosed before the assessing authority was rectifiable only by way of a revision before the Commissioner u/s 15(1) of the Act of 1954 and not as tax escaping assessment u/s 12 of the Act of 1954.

I have considered the arguments of the counsel for the petitioner and perused the impugned judgment of the Tax Board.

In my considered opinion, the Tax Board has rightly distinguished between an escaping of assessment and error of judgment by the assessing authority and held that the remedy for an error of judgment by the assessing authority lay in filing a revision petition u/s 15(1) of the Act of 1954 before the Commissioner and not by way of resorting to section 12 of the Act of 1954 for recovering escaped tax. In the facts of the case, it is admitted that there was full disclosure by the assessee including profit accrued. Yet profit accrued was not taxed owing to an error of judgment by the assessing officer.

Consequently, I am of the considered view that no substantial question of law is made out for entertaining the present revision petition.

The petition is dismissed accordingly.