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M/S Ansal Papers v. State Of U.P. - WRIT TAX No. 852 of 1993  RD-AH 11910 (13 July 2007)
Civil Misc. Writ Petition No. 852 of 1993
M/s Ansal Papers vs. State of U.P. and another
Hon'ble R.K.Agrawal, J.
Hon'ble Bharati Sapru, J.
(Delivered by R.K.Agrawal,J)
By means of the present writ petition filed under Article 226 of the Constitution of India, the petitioner, M/s Ansal Papers, seeks the following reliefs:
i) issue a writ, order or direction in the nature of certiorari to quash the impugned notice dated 17.4.1993 issued by the respondent nos. 2 under Section 15A(1)(l) of the Act (Annexure 4 to the writ petition);
ii) issue a writ, order or direction in the nature of mandamus commanding the respondent no.2 not to proceed further and not to initiate any penalty proceedings, i.e. not to pass any penalty order in pursuance of the impugned notice dated 17.4.1993.
iii) issue such other and further writ, order or direction which this Hon'ble Court may deem fit and proper in the nature and circumstances of the present case.
iv) Award costs of the petition to the petitioner.
Briefly stated the facts giving rise to the present writ petition are as follows:
According to the petitioner it is a registered firm and is engaged in the business of sale of papers etc. It is a registered dealer under provisions of U.P. Trade Tax Act, 1948 (hereinafter referred to as the U.P.Act) as well as the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act). For the assessment year 1982-83 the Assessing Authority under the U.P. Sales Tax Act had accepted the books of account and a tax liability for a sum of Rs. 7,66,724.80 was fixed upon the petitioner. Subsequently proceedings under Section 21 of the U.P. Act were initiated and the Assessing Authority vide order dated 28th September, 1987 had fixed the tax liability to the tune of Rs. 1,02,881.12. Against the order dated 28th September, 1987 the petitioner preferred an application under Section 30 of the U.P. Act. The matter was reopened and the Assessing Authority vide order dated 15th April, 1988 had raised a fresh demand of Rs. 4,115/-. Feeling aggrieved by the order dated 15th April, 1988 the petitioner preferred an appeal under Section 9 of the U.P.Act before the Assistant Commissioner (Judicial) Sales Tax, Bulandshahr who vide order dated 4th March, 1989 had dismissed the appeal. The Sales Tax Officer, Sikandrabad- respondent no.2, who was the Assessing Authority of the petitioner, had issued a notice under Section 15A(1)(l) of the U.P. Act calling upon the petitioner to show cause as to why penalty be not imposed in respect of the transactions of sale against the Form-3B made to M/s Sunil Paper Convertor, Kanpur as the said Form-3B issued by M/s Sunil Paper Convertor, Kanpur was fake. The notice dated 17th April, 1993 issued under Section 15A(1)(l) of the U.P. Act is under challenge in the present writ petition on the ground no tax liability has been fixed upon the petitioner in respect of the transactions of sale against Form-3B made to M/s Sunil Paper Convertor, Kanpur either in the original assessment order or the reassessment order passed under Section 21 read with Section 30 of the U.P. Act, the Sales Tax Officer, Sikandrabad- respondent no.2 has no jurisdiction to initiate penalty proceedings. Further a plea of limitation has also been raised on the ground that notice in question has been issued after a gap of about 10 years from the end of assessment year 1982-83. On merits it has been stated that Form 3B submitted by the petitioner had been duly examined at the time of original assessment proceedings as well as reassessment proceedings and therefore, there is no liability of penalty.
In the counter affidavit filed by A.H.Sheikh, Sales Tax Officer Sikandrabad- respondent no.2 it has been stated that as the petitioner had taken benefit of tax by filing fake Form 3B which has not been issued to M/s Sunil Paper Convertor, Kanpur the penalty proceedings under Section 15A(1)(l) of the U.P. Act has rightly been initiated. It has also been stated that said Form 3B had not been issued by the Department and therefore, the question of taking the benefit of the same does not arise. The plea of limitation has also been repelled.
In the rejoinder affidavit filed by the petitioner the averments made in the counter affidavit have been denied and the pleas taken in the writ petition have been reiterated. It has further been stated that the petitioner cannot be held liable for the Form 3B submitted by the purchasing dealer M/s Sunil Paper Convertor, Kanpur as the same has been accepted in the assessment proceedings after due verification.
In the supplementary counter affidavit filed by Nirmal Kumar, Assistant Commissioner, Trade Tax, Sikandrabad district Bulandshahr it has been stated that penalty proceeding is an independent proceeding not related with the assessment proceeding and the same can be initiated as and when adverse material is found against the petitioner, therefore Rule 73 of the U.P.Trade Tax Rules does not apply in the present case.
In the supplementary rejoinder affidavit filed by the petitioner it has been stated that no where it has been stated that firm M/s Sunil Paper Convertor, Kanpur was not a registered dealer and, therefore the petitioner had acted bonafidely and no case of penalty has been made out.
We have heard Sri Ashok Kumar, learned counsel for the petitioner and Sri M.R.Jaiswal, learned standing counsel for the respondents.
Learned counsel for the petitioner submitted that in the original assessment proceedings and also in the reassessment proceedings the sales made against Form 3B by M/s Sunil Paper Convertor, Kanpur have been examined and accepted and, thereafter tax liability has been fixed upon the petitioner, thus the question of taking the benefit of fake declaration form does not arise. In any event it has been stated that the penalty proceedings have been initiated on 17th April, 1993 that is after more than 10 years from the end of assessment year 1982-83 is highly belated. According to him no period of limitation has been provided for initiating the proceedings for imposition of penalty but it should be initiated within a reasonable time and in the present case initiation of penalty proceedings after a long gap of 10 years cannot be said to a reasonable. He further submitted that under Rule 73 of the U.P. Trade Tax Rules, 1948 a dealer is required to maintain books of accounts and other documents for a period of 8 years after close of the assessment year, which in the present case ended on 31st March, 1991, or till the proceedings under the U.P.Act is completed whichever is later, which in the present case ended on 4th March, 1989. As there is no obligation on the part of the petitioner to maintain books of account after 31st March, 1991 the notice dated 17th April, 1993 for initiating the penalty proceedings is liable to be set aside. In support of his above plea he has relied upon a Division Bench decision of this Court in the case of M/s Allahabad Paper House vs. State of U.P. and another (2004 NTN (Vol.25) 994).
In reply, Sri M.R.Jaiswal, learned standing counsel, submitted that the petitioner has challenged the show cause notice dated 17th April, 1993 issued by the respondent no.2 under Section 15A(1)(l) of the U.P.Act which is not a jurisdictional notice. It is simply a show cause notice wherein the petitioner has only been asked to show cause. The petitioner ought to have filed his reply and contest the matter before the authority concerned where all the questions of fact and the law can be gone into. He further submitted that as the petitioner has been granted benefit on the basis of fake declaration Form 3B the proceedings for imposition of penalty can be initiated. Whether or not the penalty can be imposed is the question to be decided by the authorities. He has relied upon a decision of the Apex Court in the case of State of U.P. and another vs. Anil Kumar Ramesh Chandra Glass Works and another (2005) 11 SCC 451.
We have given our anxious consideration to the various pleas raised by the learned counsel for the parties. We find that admittedly in the present case a show cause notice has been issued calling upon the petitioner to show cause as to why penalty be not imposed. It is not a jurisdictional notice. The petitioner can very well raise the plea of limitation before the authority concerned. The Apex Court in the case of Anil Kumar Ramesh Chandra Glass Works (supra) has held that Article 226 should not be permitted to be invoked in order to challenge show cause notices unless accepting the fact in the show-cause notices to be correct, either no offence is disclosed or the show cause notice are ex facie without jurisdiction.
It may be mentioned here that a Constitution Bench of the Apex Court in the case of Lalji Haridas vs. R.H.Bhatt and another (1965) 55 ITR 415; has held that the jurisdiction conferred on the High Court under Article 226 is not intended to supersede the jurisdiction and authority of the Income Tax Officers to deal with the merits of all the contentions that the assessee may raise before them, and so it would be entirely inappropriate to permit an assessee to move the High Court under Article 226 and contend that a notice issued against him is barred by time. That is a matter which the income tax authorities must consider on the merits in the light of the relevant evidence.
The aforesaid decision has been followed by this Court in the case of M/s Dabur India Limited vs. State of U.P. and others (1989 UPTC 971) wherein this Court has held that the point of limitation can be and ought to be agitated before the statutory authorities.
In the case of M/s Bashir Ahmad Misbaul Haq, Sambhal, Moradabad vs. State of U.P. and others (1992 UPTC 418) this Court has held as follows:
".....As pointed out by the Supreme Court in Lalji Haridas vs. Income Tax Officer and another (1961) 43 ITR 387, the question whether the assessment proceedings initiated against a person are barred by limitation and are, thus, without jurisdiction, can and ought to be raised by him before the Assessing Authority; that is not a point which can be legitimately agitated in writ proceedings. It may be observed that these observations came to be made by the Supreme Court while dealing with a case under Section 34 (3) of the Indian Income Tax Act, 1922, a provision dealing with the question of period of limitation for assessment and reassessment under certain contingencies. We see no good reason for not applying the rule laid down by the Supreme Court in the instant case. In order to claim a writ of prohibition to forbid any inferior authority from continuing the proceedings, a total want of jurisdiction on the part of the authority concerned must be demonstrated. We are not satisfied that in the present case a total want of jurisdiction is made out. The case in hand is not an appropriate case where this Court should interfere and interdict the proceedings at this stage. It needs no mention that the petitioner shall have an ample opportunity to state his case before the Assessing Authority in pursuance to the impugned assessment notice and to take all such obligations as may be available to him under law including the objections, which are raised in this petition. If and when such objections are raised they shall be decided by the Assessing Authority, i.e. the third respondent in accordance with law."
We are in respectful agreement with the view taken in the aforesaid cases. It may be mentioned here that there is no period of limitation prescribed for levying the penalty under the Act. The plea is founded on the basis of unreasonable delay, which would depend on the facts and circumstances of each case and can more appropriately be gone into by the authority concerned under the Act.
In view of the foregoing discussions we are not inclined to interfere with the show cause notice in exercise of our jurisdiction under Article 226 of the Constitution of India and leaving it open to the petitioner to file its reply before the Assessing Authority- respondent no.2 raising all such points as are available to it under law. The Assessing Authority- respondent no.2 shall take appropriate decision thereon in accordance with law. The writ petition is, therefore, dismissed on the ground of alternative remedy.
July 13 ,2007
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