SAHAI, J. - (1.) THESE two references under section 11 of the U.P. sales Tax Act (hereinafter referred to as the Act) have been made by the judge (Revisions) Sales Tax, U.P., at the instance of M/s. Kashi Jewellers, the assessee (hereinafter called as the "assessee").
(2.) THE assessment years relevant for these references are 1958-59 and 1959-60. The assessee is a dealer in ornaments and bullions. For the year 1958-59 he disclosed a turnover of Rs. 5,65,962.67 and for the year 1959-60 of Rs. 6,19,902.67. The assessee's version was accepted and the final assessment orders were made under rule 41(5) of the rules framed under the Act. A little later the assessing authority came in possession of certain documents on the basis of which proceedings against the assessee under section 21 of the Act for his reassessment for the two years mentioned above were started. The assessing authority exercising his "best judgment" fixed the escaped turnover at a figure of Rs. 7 lacs for each of the two years. The assessee appealed and the appellate authority reduced the turnover to Rs. 4,08,000 for each of the two years mentioned above. The assessee then filed revision applications before the Judge (Revisions) who partly allowed and partly dismissed the same and as already stated earlier the instant references have been made at the instance of the assessee to us. The question referred is : "Whether in case initial assessment under rule 41(5) has been passed accepting the turnover disclosed without there being 'best judgment assessment' in the initial assessment, is best judgment assessment permissible in case of partial escape of the turnover in proceedings under section 21 of the Act in view of the explanation attached to section 21(1)." The sole question that requires determination at our hands is whether in a case of reassessment on the ground of escaped assessment a best judgment assessment can be made.
(3.) MR . Brij Lal Gupta, who has appeared for the assessee has submitted that the explanation to sub-section (1) of section 21 of the Act would show that in a case of reassessment best judgment assessment cannot be made. It would be conducive to a proper understanding of the submission made at the Bar, if section 21 of the Act is reproduced in its entirety : "21. Assessment of tax on the turnover not assessed during the year - (1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing notice to the dealer, and making such enquiry as may be necessary, assess or reassess him to tax : Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment or full assessment, as the case may be. Explanation. - Nothing in this sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment. (2) No order of assessment under sub-section (1) or under any other provision of this Act shall be made for any assessment year after the expiry of four years from the end of such year : Provided that where the notice under sub-section (1) has been served within such four years the assessment or reassessment to be made in pursuance of such notice may be made within one year of the date of the service of the notice even if the period of four years is thereby exceeded : Provided further that nothing contained in this section limiting the time within which any assessment or reassessment may be made shall apply to an assessment or reassessment made in consequence of, or to give effect to, any finding or direction contained in an order under section 9, 10 or 11. Explanation. - Where the assessment proceedings relating to any dealer remained stayed under the orders of any civil or other competent court, the period during which the proceedings remained so stayed shall be excluded in computing the period of limitation for assessment provided under this sub-section." It is true that sub-section (1) of section 21 provides for assessment as also for reassessment to tax. Section 21 contemplates two classes of cases. One class is of dealers who have completely escaped assessment to tax for any year. The other class is of dealers, who, though assessed, have not been fully assessed, because a part of their turnover escaped the attention of the assessing authority. The explanation to sub-section (1) only provides that "nothing in this sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment.";