The Commissioner, Trade Tax vs Shambhu Dayal Agrawal

Rajes Kumar, J.—These two revisions u/s 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") are directed against the order of Tribunal dated 26.12.1996 for the assessment year 1985-1986. Revision No. 354 of 1997 arises from the order u/s 22 of the Act and revision No. 359 of 1997 arises from the penalty proceedings u/s 15-A(1)(c) of the Act.

Brief facts of the case are that it appears that at the time of assessment proceedings dealer/opposite party (hereinafter referred to as "Dealer") had filed the list of purchase of food grains showing the purchases from Kachcha Arhati at Rs. 54,02,882.62p. and the purchase of oil seed from Kachcha Arhati at Rs. 12,43,777.79p. Subsequently, it was found that the total amount shown in the list was wrong and it should be at Rs. 61,97,799.11p. for food gain and Rs. 12,55,628.35p. for oil seed. When this mistake was detected, notice u/s 21 of the Act was issued. However, no order was passed u/s 21 of the Act. Subsequently, an order u/s 22 of the Act was passed rectifying the assessment order. Penalty proceeding u/s 15-A(1)(c) of the Act was also initiated on the ground that the dealer has furnished inaccurate particulars relating to the purchases. Matter went to the Tribunal in appeal. Tribunal set aside the order passed u/s 21 of the Act. Subsequently, an order u/s 22 of the act was passed rectifying the assessment order. Penalty proceeding u/s 15-A(1)(c) of the Act was also initiated on the ground that the dealer has furnished inaccurate particulars relating to the purchases. Matter went to the Tribunal in appeal. Tribunal set aside the order passed u/s 21 of the Act on the ground that once the notice u/s 21 of the Act was initiated, the assessment order ceased to existence and could not be rectified u/s 22 of the Act relying upon the decision of the Apex Court in the case of Kundan Lal Sri Kishan Mathur (U.P.) v. CST, U.P. and Anr. reported in 1987 UPTC 404. Tribunal also set aside the penalty u/s 15-A(1)(c) of the Act on the ground that u/s 15-A(1)(c) of the Act penalty could be levied only for the concealment of the turn over.

Heard learned counsel for the parties.

Learned Standing Counsel submitted that by Act No. 28 of 1991 Explanation-III has been added w.e.f. 01.03.1973. Therefore, in view of the amendment, the original assessment order was a valid order and was in existence and could be rectified u/s 22 of the Act. He submitted that Tribunal without considering the amendment set aside the order passed u/s 22 of the Act, he further submitted that the penalty u/s 15-A(1)(c) of the Act could be levied on furnishing of inaccurate particulars also apart from the concealment of the turn over and since inaccurate particular was furnished, therefore, levy of penalty was justified. Learned Counsel for the dealer supported the order of Tribunal.

I have perused the order of Tribunal and the authorities below.

In my opinion, order of the Tribunal can not be sustained. Explanation-III of Section 21, which has been added by Act No. 28 of 1991 w.e.f. 01.03.1973 reads as follows:

"Notwithstanding the issuance of notice under this sub-section where an order of assessment or re-assessment is in existence from before the issuance of such notice it shall continue to be effective as, such, until varied by and order of assessment or re-assessment made under this section in pursuance of such notice."

Admittedly, after the issuance of notice u/s 21 of the Act, no order was passed u/s 21 of the Act and the original assessment order has not been varied. Therefore in accordance to the Explanation-III the original assessment order stood continued. Tribunal without looking into the Explanation-III set aside the order passed u/s 22 of the Act, which is wholly illegal and unjustified.

So far as penalty is concerned, Tribunal has wrongly observed that the penalty u/s 15-A(1)(c) of the Act could be levied only for the concealment of the turn over while the penalty u/s 15-A(1)(c) of the Act could also be levied for furnishing of inaccurate particulars. In the circumstances, order of Tribunal is liable to be set aside. In the aforesaid circumstances, matter is remanded back to the Tribunal to decided the appeals afresh.

In the result, both the revisions are allowed. Order of Tribunal is set aside and the matter is remanded back to the Tribunal to decide both the appeals afresh.