Ganesh Oil Mills Vs. Commissioner of Income Tax

Ganesh Oil Mills

 Vs.

 Commissioner of Income Tax

Supreme Court

Appellate Division

(Civil)

Present:

Fazle Munim, J.

Ruhul Islam, J.

K.M. Subhan.J.

Ganesh Oil Mills……….Appellant

Vs.

Commissioner of Income Tax…………Respondent

Judgment

March 13, 1978.

Cases Referred to-

The Commissioner of Income Tax, Dacca Zone Vs. Gulistan Cinema Co (1976) 28 DLR (AD)14.

Lawyers Involved:

C.R. Ali, Advocate, instructed by Abu Bakkar, Advocate-on – Record.—For the Appellant.

A.K.M. Mozammel Haque Bhuiyan, Advocate instructed by S. S. Hoda, Advocate-on- Record.—For the Respondent.

Civil Appeal No. 75 of 1977

(From the Judgment and Order 10th April, 1975 par­sed by the High Court Division in Ref­erence Case No. 28 of 1969).

Judgment

K. M. Subhan, J.—This appeal by-the assessee by special leave arises from Judg­ment and Order passed by the Division Bench of the High Court Division to which a reference was made under section 17 (1) of the Sales Tax Act by the Income Tax Appellate Tribunal.

2. Facts necessary for the disposal of the appeal are that the assessee is a firm which crushed Til Oil and the original assessment was made on 31-12-58 under section 10(3) of the Sales Tax Act. A revision petition was filed and a reduction in turnover was allowed under section 16(2). It, however, transpired that sales of Til oil and Linseed oil had escaped assessment in the original assessment made on 31-12-58. This mistake, first, which according to the Sales Tax Officer was ap­parent from the records and a letter was issued on 25th August, 1 962 proposing recti­fication of the assessment under section 30(1) of the said Act. The assessee on the same date stated that he had “no objection to the proposed rectification under section 30(1)”.

3. The Sales Tax Officer accordingly pas­sed a rectified order on 12-9-62 pointing out that sale of Til oil and Linseed oil amount­ing to Rs. 1.36,107 adopted in the corres­ponding income-tax assessment had escaped assessment’ of Sales Tax. The assessee preferred an appeal before the Appellant Assistant Commissioner, who rejected it and thereafter an appeal was pre­ferred before Income Tax Appellate Tribunal Dacca Bench, Dacca. The said Tribunal re­jected the appeal upholding the assessment order of the Sales Tax Officer.

4. In these facts the following question was framed by the Tribunal for the opinion of the High Court Division.

“Whether the facts and in the circums­tances of the case the Tribunal is justified in law to hold that provision of section 30. (1) of the Act applied and in reopening the assessment already completed”.

5. The learned Judges of the High Court Division answered the question in the affir­mative, rejecting the contention of the assessee. Leave by this Court was granted to mine if the High Court Division has correctly interpreted section 28 of the Sales Tax Act and Section 54 of the Income Tax Act; and whether notice on one of the partners was sufficient notice to the petitioner firm.

6. A question, at the leave stage, was raised with regard to the maintainability of the appeal, by the learned counsel for the respondent on {he ground that no certificate was prayed for under the provision of Income Tax Act as applicable to the Sales Tax Act.

7. The question of maintainability of an appeal directly from the order of the High Court Division without praying a certificate under section 66A(2) of the Income Tax Act was raised in the case of The Commissioner of Income Tax, Dacca Zone Vs. Gulistan Cinema Co(1976) 28 DLR (AD)14. It was held by this Court that appeals from the Or­der of the High Court in such matters are maintainable under Article 103 of the Cons­titution without praying for a certificate un­der section 66(A) 2. We accordingly, hold that the present appeal is maintainable in view of the said decision of this Court.

8. Mr. C.R. Ali, learned Advocate appe­aring on behalf of the appellant has submit­ted that the scope of section 28 is distinct from that of 30 as will be apparent from the language of these two sections. Mr. Ali further submitted that the Sales Tax Officer sought to rectify the earlier assessment under 30(1) on the ground that in the assessment order sales of linseed and Til oil were not included in the taxable turnover through mistake; and that “the mistake is apparent from records”.

9. Mr. Ali submitted that section 30(1) of the Act permits rectification of any “mistake apparent on the face of the record or proceeding connected with that order.” According to Mr. Ali, the two expressions “mistake from the record” and “mistake on the face of the record” have two different imports. The scope of these two expressions being different and the mistake in question not being a mistake on the face of the record, the Sales Tax Officer committed an error to seek to rectify the assessment on the ground of “mistake apparent from the record.”

10. Mr. A. K. M. Mozammel Haque Bhuiya, the learned advocate appeared on behalf of the Revenue and submitted that the mistake in not including the Sales of Linseed oil and til oil in the taxable turnover and the mistake being apparent on the face of the record, the Sales Tax Officer was competent to rectify the mistake under section 30 of the Act.

11. The learned Judges of the High Court Division accepted arguments that for   rectification of any mistake apparent on the face of the record resort could be under section 30(1) of the Act. This view was taken by the learned Judges because the Income Tax Officer also assessed the Sales Tax of the assessee in performance of his function as a Sales Tax Officer and took resort to section 30(1) of the Act for the rectification of the mistake which is apparent on the face of the record or proceeding connected therewith. The order passed by the Sales Tax Officer on 12-9-62 makes it clear that the sale of Til Oil and Linseed Oil was estimated at Rs. 1, 36,107 for the defect noted in the Income-tax assessment order and this mistake having come to his knowledge he had resorted to section 30(1) of the act for rectification.

12. The expression “mistake apparent on the face of the record” has been accepted to mean a patent error or an error which is self evident on the face of the record and does to require argument or evidence or a long drawn process to establish it. In the pre­sent case the order dated 12-9-62 of the Sales Tax Officer shows that certain defects noted in the Income Tax assessment order, the Sales of the Til Oil and Linseed Oil was assessed at Rs. 1, 36,107, From the said order it is clear that in the assessment order sales of the Linseed Oil and Til Oil were included in the turnover due to mistake. It is obvious that the Sales Tax Officer who also happened to be an Income Tax Officer imported his knowledge of this mistake from the Income Tax assess­ment order.

13. The plea of the assessee in that the amount of Rs. 1,36,107 on account of Sale of Til Oil and Linseed Oil, if escaped assessment resort could be made under sec­tion 28 of the Act, within four years of the assessment year which ended on 31-3-57, escaped assesment having become barred by limitation under section 28 rectification under section 3(1) of the Act was resorted to. The re­levant part of section 28(1) reads as follows:

“28. (1) If for any reason any tax pay­able under this Act has escaped assess­ment or has not been paid in any year the Sales Tax Officer may at any time within four years of the end of that year, assess the tax payable, after issuing a notice to the assessee and making such inquiry as he considered necessary.”

Section 30(1) reads as follows:

“30. (1) The Commissioner, the Appel­late Assistant Commissioner or the Sales Tax Officer may, at any time within four years from the date of any order passed by him, of his own motion, rectify any mistake apparent on the face of the record or proceedings connected with that order and shall within the like per­iod rectify any such mistake which has been brought to his notice by an asssee:

Provided that no such rectification shall be made so to enhance an assessment or reduce a refund unless notice accordingly has been given to the assessee and he has been given a reasonable opportunity of being heard.”

14. It is not disputed that assessment year in question ended on 31-3-57 which commenced from 1-4-56. Consequently under section 28 it has to be completed within four years from 31-3-57 i.e. 31.3.61. The mistake was detected on 25-8-62 that is beyond the period of four yeas. Section 20(1) permits rectification of “mistake apparent on the face of the record” within four years from the date of any order passed by the officer concerned. Calculating the time from the date of the first assessment i.e. 31-12-58 the Sales Tax Officer was within time to pass on order under section 30(1) of the Act.

15. The department’s case is not a case of escaped assessment but is mere rectification of a mistake which is patent on the face of the record, as pointed out by the Income Tax Officer and in such capacity he discovered as a Sales Tax Officer mistake under Section 30(1). The Sales Tax officer, how­ever, is not entitled to import his knowledge in assessing sales tax under section 30(1) from the Income Tax return. Section 54(3) (K) of the Income Tax Act is a bar to use the Income Tax return for making an assessment under the Sales Tax Act. There is little doubt that without the knowledge of the defect in the Income Tax assessment the Officer co­uld not have found that the sales in question were not included in the taxable turnover which according to the Sales Tax Officer, was due  to mistake. The order of the Income Tax Appellate Tribunal clearly points out that the relevant sales had escaped assessment of Sales Tax. The relevant sales having esca­ped assessment of Sales Tax recourse only co­uld be taken to the provision of section 28 but by the time this mistake was detected four years had already elapsed from the end of the year and it appears that to circumvent the difficulty regarding limitation rectification was sought under section 30(1). In this view of the position in law we find that the learned Judges of the High Court did not answer the question correctly. The answer must therefore be in the negative.

The appeal is accordingly allowed. We make no order as to costs.

Ed.

Source: , 1979, (AD)

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