M SAYANNA AND GARIKAPATI NARASIMHULU Vs. STATE
LAWS(APH)-1969-8-6
HIGH COURT OF ANDHRA PRADESH
Decided on August 18,1969

M SAYANNA AND GARIKAPATI NARASIMHULU Appellant
VERSUS
STATE Respondents







JUDGEMENT

MADHAVA REDDY,J. - (1.)THIS is a petition under article 226 of the Constitution of India, seeking the issuance of a writ of mandamus restraining the respondents from proceeding to collect the tax levied for the assessment years 1957-58 and 1958-59 filed in the following circumstances.
(2.)THE petitioner, who is a registered dealer under the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act"), failed to file the return of his turnover for the assessment years 1957-58 and 1958-59. The third respondent herein issued a preliminary notice on 29th February, 1964, to appear on 2nd March, 1964, and file a detailed statement of accounts. The final notice issued on 6th March, 1964, directed the petitioner to produce his accounts before 13th March, 1964. A provisional assessment was made on 17th March, 1964, and the petitioner was assessed on a turnover of Rs. 50,000 for the year 1957-58 and on Rs. 30,000 for the year 1958-59 and a tax at the rate of 3 per cent thereon was levied. After hearing the objections filed regarding the provisional assessment, the final assessment order was made on 24th March, 1964. Thereafter, on 12th June, 1964, proceedings for the levy of penalty were initiated and the petitioner was directed on 22nd June, 1964, to pay five times the tax by way of penalty.
The learned counsel for the petitioner, Sri Dasaratharamayya, contends that the assessment order as well as the order imposing the penalty are illegal and without jurisdiction, firstly, because they have been initiated after a period of four years and, secondly, because penalty of more than 1 1/2 times the tax could not have been imposed. In regard to the penalty for the year 1957-58, it is further argued that the proceedings have been initiated after more than six years of the order of assessment and that no such penalty could have been levied. So far as the first contention is concerned, we do not see any force. Sub-section (4) of section 14 of the Act has been amended by Act 26 of 1961 on 2nd September, 1961, and so far as it is relevant for our purpose, reads as follows :

" (4) In any of the following events, namely, where the whole or any part of the turnover of business of a dealer has escaped assessment to tax, or has been under-assessed or assessed at a rate lower than the correct rate, or where the licence fee or registration fee has escaped levy or has been levied at a rate lower than the correct rate, the assessing authority may, after issuing a notice to the dealer and after making such inquiry as he considers necessary, assess the correct amount of tax payable or levy the correct amount of licence fee or registration fee - (a) within a period of six years from the expiry of the year to which the tax, licence fee or registration fee relates, if any such event has occurred on account of the failure of the dealer to disclose the turnover or any other particulars correctly; (b) within a period of four years from the expiry of the year aforesaid, if any such event has occurred due to any other causes. In a case falling under clause (a), the assessing authority may also direct the dealer to pay, in addition to the tax assessed as aforesaid, a penalty not exceeding one and a half times the amount of that tax. Explanation.- The expression 'assessing authority' occurring in this sub-section shall, in relation to licence fee or registration fee, be construed as referring to the licensing or registering authority, as the case may be, under this Act. "

(3.)A reading of this sub-section clearly indicates that when the whole or any part of the turnover of a business of a dealer escaped assessment at any time within six years of the year of assessment, the assessing authority may, after issuing a notice and after making such enquiry as the assessing authority deems necessary, assess the correct amount of tax payable. The condition precedent for the exercise of this power is that the turnover should have escaped assessment, either wholly or partly, and this must have been noticed and the authority concerned must have issued a notice within six years of the assessment year. Once these two conditions are satisfied, there is no further impediment in the exercise of this power. The turnover may escape assessment either because of the failure of the dealer to file a return, who is under an obligation to file a return or because the assessing authority for any other reason comes to the conclusion that the turnover was under-assessed. Whatever the reason may be, when once the assessing authority finds that the whole or any part of the turnover has escaped assessment, this power can be exercised. Considering a similar provision, viz. , rule 17 of the Madras General Sales Tax Rules, 1939, a Bench of the Madras High Court in State of Madras v. S. Balu Chettiar ([1956] 7 S. T. C. 519), observed :
" Whether it was a case of omission or of deliberate concealment on the part of the assessee, he did not submit any return. It was his default that led to the escape of the turnover for 1951-52 from assessment to the tax lawfully due. It was the whole of the turnover for that year that escaped assessment. "

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