Deputy Commissioner of Commercial Taxes, Madras Division vs K. Kapoorchand Bhandari

Jagadisan, J.—This petition arises out of assessment proceedings under the Madras General Sales Tax Act, 1959. The Deputy

Commissioner of Commercial Taxes, Madras Division, is the petitioner. The respondent who is the assessee was assessed by the Deputy

Commercial Tax Officer, Peddunaickenpet, for the year 1954-55 on a gross and net turnover of Rs. 51,381-6-0. The assessee is stated to be

carrying on business as banker and financier advancing money on hire-purchase agreements of old motor cars. He is also a dealer in motor tyres

and tubes. No assessment was made on the assessee in respect of the turnover covered by the hire-purchase agreements in the original assessment

dated 21st October, 1955. The Deputy Commercial Tax Officer however revised the assessment purporting to act u/s 16(1) of the Madras

General Sales Tax Act, 1959, and computed the turnover of the assessee for the year 1954-55 at Rs. 4,68,515-37 nP. This was on the footing

that the turnover relating to hire-purchase agreements had escaped assessment when the original assessment was made. The assessee preferred an

appeal against the reassessment order to the Appellate Assistant Commissioner, Madras-II, who con- firmed the revised assessment. The

assessee preferred a further appeal to the Sales Tax Appellate Tribunal, Madras, and the Tribunal held that the department had no jurisdiction to

revise the assessment u/s 16(2) of the 1959 Act, Accordingly the Tribunal set aside the order of the Deputy Commercial Tax Officer and that of

the Appellate Assistant Commissioner. Hence this revision petition has been preferred by the department.

The respondent is not represented before us. Nor did he appear in person. We find from the records that he has been duly served with notice of

this revision petition. The only question no before us is whether the Tribunal is right in holding that the department exceeded its jurisdiction in acting

u/s 16(1) of the Act. That provision reads as follows :

Where, for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax or has been assessed at a rate

lower than the rate at which it is assessable, the assessing authority may, subject to the provisions of Sub-section (2), at any time within a period of

five years from the expiry of the year to which the tax relates, assess the tax payable on such turnover after service of notice on the dealer and after

making such inquiry as it may consider necessary.

The Tribunal has found that the assessing authority deliberately, we are using this expression in the sense that the officer knew what he was

about, excluded the turnover of the hire-purchase agreements on the ground that such turnover was not properly includible having regard to the

decision of the High Court in the matter. The contention that was urged by the assessee before the Tribunal was that the assessing officer having

focussed his mind on the question whether a particular amount of turnover should be assessed or not, and having reached a decision on the matter,

it will not be open to the same officer or to a succeeding officer to go into the question afresh invoking Section 16 of the Act. The materials on

which the Tribunal has found that the original officer excluded the turnover relating to hire-purchase transactions knowingly but erroneously are

these. The Tribunal refers to the fact that in the assessment year 1953-54 the officer had specifically considered the turnover relating to the hire-

purchase agreements and reached the conclusion that the turnover was not assessable. In our opinion, the Tribunal ought not to have taken this into

consideration at all. The Tribunal points out that in the assessment file there is a note by the officer in these terms : ""The hire-purchase is held to be

not taxable by the High Court."" This is supposed to have been the foundation for the assessment order, which actually did not include in the taxable

turnover the amount covered by the hire-purchase agreements. But the order of the assessing authority ex facie does not disclose that the officer

directed his attention as to the taxability or otherwise of the hire-purchase turnover. The order reads thus,;

Sri K. Kapoorchand Bhandari, having his office at No. 13 Elephant Gate Street, is a banker and financier advancing money on hire-purchase

agreements. He is also supplying motor tyres and tubes to his constituents. He has returned the turnover of such sales for the year ended March,

1955, in monthly returns at Rs. 51,381-6-0. The accounts were checked and the turnover returned and the books were in order. It is accepted.

I accordingly determine the turnover of Sri K. Kapoorchand Bhandari for 1954-55 at Rs. 51,381-6-0 and finally assess and levy a tax of Rs.

802-13-3. Tax collected is Rs. 818-15-0.

There is nothing in this order which would indicate even remotely that the officer was of the opinion that the hire-purchase transactions were not

within the ambit of the Act. We are unable to agree with the vie taken by the Tribunal that there was a conscious exclusion of the hire-purchase

transaction in the first assessment against the assessee. There has therefore been an actual escapement of tax by reason of the failure of the officer

to take into account the entire taxable turnover and to compute it properly. The department was therefore right in making a reassessment on the

assessee acting u/s 16 of the Act. The Tribunal has found that the turnover relating to the hire-purchase agreements was properly assessable even

at the time of the first assessment. This vie is well founded on the evidence on record.

It is not necessary for us to consider the question whether Section 16 can properly be invoked where the assessing officer had considered the

taxability of a particular turnover and reached a decision favourable to the assessee on the first occasion. The learned Additional Government

Pleader drew our attention to the decision of the Supreme Court in Kameshwar Singh v. State of Bihar (1960) S.C.J. 145. But in the vie that we

have taken, we are not called upon to decide the question whether the decision of the Supreme Court is properly applicable to the facts and

circumstances of the present case.

The revision petition is allowed. But there will, however, be no order as to costs.