PETITIONER: SWASTIK OIL MILLS LTD. Vs. RESPONDENT: H. B. MUNSHI, DEPUTY COMMISSIONER OF SALES TAX,BOMBAY DATE OF JUDGMENT: 29/11/1967 BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SHAH, J.C. RAMASWAMI, V. CITATION: 1968 AIR 843 1968 SCR (2) 492 CITATOR INFO : RF 1972 SC 38 (8,11) D 1976 SC1115 (10,13) R 1976 SC1545 (17) R 1976 SC2136 (12,14) ACT: Revisional powers-suo motu exercise of-limitations-if further inquiry to gather additional material permissible. Bombay Sales Tax Act, 5 of 1946, Act 3 of 1953, s. 31, Act 51 of 1959, ss. 57, 77(1) (a), 77(3)-Scope of. HEADNOTE: The appellant was registered as a dealer under the various Sales Tax Acts in force in Bombay from time to time i.e. Bombay Acts 5 of 1946, 3 of 1953 and 51 of 1959. In the course of its assessments to sales tax for the periods from 1st April, 1948 to 31st March, 1950, and from 1st April 1950 to 31st March, 1951, the appellant claimed exemption from tax, inter alia, in respect of certain despatches of goods from its head office in Bombay to its branches in other States. The Sales Tax Officer rejected these claims but, in appeal, the Assistant Collector accepted the claim in respect of the despatches to various branches though he rejected all other claims for exemption. He also directed a refund of the excess 'tax collected from the appellants. While revision petitions filed by the appellant against these orders were pending, a notice was issued to him on January 7, 1963 by the Deputy Commissioner of Sales Tax in Form XXIV under s. 31 of the Bombay Sales Tax Act, 1953, intimating the appellant that he proposed to revise suo motu the orders passed by the Assistant Collector in so far as he had allowed deduction in respect of the entire goods despatched to the appellants' branches outside Maharashtra because, in so doing, he had overlooked certain provisions of law which were specified in the notice. Tile appellant filed a petition under Art. 226 of the Institution seeking to quash the notice dated 7th January, 1963 but his petition was dismissed by the High Court. In the appeal to this Court it was contended on behalf of the appellant, inter alia (i) that in exercise of the revisional powers, the Deputy Commissioner, whether acting under the Sales Tax Act of 1946, or of 1953, or of 1959, could only proceed to take action on the basis of the material already present on the record and was not entitled to act on conjecture or to institute any enquiry so as to include additional material nor to judge the correctness of the order sought to be revised; (ii) that the notice in question was issued on 7th January, 1963, when the Act of 1959 had already come into force and the Act of 1953 had been repealed; so that any revisional jurisdiction could only be exercised by the Deputy Commissioner under the Act of 1959 and not under the Act of 1953-, as the power under s. 57 of the Act of 1959 could only be exercised within five years from the date of the order sought to be revised; the notice issued by the Deputy Commissioner was time barred; and (iii) that the proceedings to be instituted were barred by time, because limitation of a reasonable time; within which the revisional Powers are to be exercised must be implied in the statute itself. 493 HELD : The proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant were not incompetent and the High Court was right in refusing the writ sought by the appellant. (i) Whenever a power is conferred on an authority to revise an order, it is entitled to examine the correctness, legality and propriety of the order and to pass such suitable orders as it may think- fit in the circumstances of the particular case. The proceedings for revision, if started suo motu, must not be based on a mere conjecture and there should be some ground for invoking the revisional powers. Once these powers are invoked, the actual interference must be based on sufficient grounds and, if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding or directing a further enquiry and thereafter admitting additional material. [496 A-C] The State of Kerala v. K. M. Cheria Ahdulla and Company, [1965] 1 S.C.R. 601, explained and followed. State of Andhra Pradesh v. T. G. Lakshmnaiah Setty & Sons, 12 S.T.C. 663; disapproves. In the present case,. the notice issued by the Deputy Commissioner, on the face of it, disclosed the reasons which led him to take proceedings for exercising his revisional powers suo motu, and it could not be said on those facts that he was acting merely on conjecture. There was no reason to think that, when proceeding with his inquiry, he would not keep within the limitations indicated by this Court in K. M. Cheria Abdullas case. (ii) The effect of s. 77(1) (a) of the Act of 1959 is to continue in force the Act of 1953 as well as: the Act of 1946 to the extent to which they were in force when the Act of 1959 came into force for the purposes of levy, assessment, reassessment and collection of sales-tax. Fur- thermore, by virtue of s. 7(e) of the Bombay General Clauses Act, 1904, which was made applicable to the repeal of the Act of 1953 by s. 77(3) of the 1959 Act, any legal proceeding in respect of levy, imposition or recovery of tax is to continue and any fresh investigation, legal proceeding or remedy could be instituted as if there had been no repeal by the Act of 1959. Consequently, the repeal of the Act of 1953 did not in any way affect the power of the Deputy Commissioner to institute proceedings for revision suo motu against the appellate order of the Assistant Collector which had been Passed in exercise of his power under the Act of 1946. [499 C-500 B] Although the Deputy Commissioner, in seeking to exercise revisional powers should have proceeded under s. 22 of the Act of 1946 and not under s. 31 of the 1953 Act, this fact was immaterial as the provisions of the two Sections were similar. [500 D-E] (iii) Section 22 of the Act of 1946 and s. 31 of the Act of 1953 do not lay down any period of limitation for the exercise of the power of revision by a Deputy Commissioner suo motu and no such limitation could be read in the two Acts. [500 G] The State of Orissa v. Debaki Debi and Others, 15 S.T.C. 153. Commissioner of Income-tax, Bombay City 1 v. Narsee Nagsee & Co., 31 I.T.R. 164, Manordas Kalidas v. V. V. Tatke, 11 S.T.C, 87. Disesar House v. State of Bombay, 9 S.T.C. 654, distinguished. 494 Maharaj Kumar Kamal Singh v. C.I.T., Bihar and Orissa, 35 I.T.R. 1, referred to. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 637 of
1967.
Appeal from the judgment and order dated January 27, 1966 of
the Bombay High Court in Misc. Application No. 112 of 1963.
S. T. Desai, G. L. Sanghi, B. Datta and O. C. Mathur, for
the appellant.
R. M. Hazarnavis, S. P. Nayar, and R. H. Dhebar, for the
respondents.
The Judgment of the Court was delivered by
Bhargava, J. The Swastik Oil Mills Ltd., appellant, carries
on business of manufacturing vegetable oils, soaps and other
products and selling them in India as well as exporting them
outside India. It was registered as a dealer under the
various Sales Tax Acts in force in Bombay. The first of
these Acts was the Bombay Sales Tax Act 5 of 1946, which was
replaced by th -Bombay Sales Tax Act 3 of 1953. The third
and the latest -Act now in force in Bombay is the Bombay
Sales Tax Act 51 of 1959. ,’The appellant was assessed to
sales tax on its turnover for the periods from 1st April,
1948 to 31st March, 1950, and from 1st April, 1950 to 31st
March, 1951 on the basis of Returns of turnover submitted by
it. In these Returns, the appellant claimed exemption from
tax in respect of the turnover representing the despatches
or transfer of goods from its Head Office Bombay, to its
various Depots or Branches in other States in India, and
also exemption in respect of sales which were alleged to
have taken place in the course of inter-State trade after
26th January, 1950. The Sales Tax Officer in his order of
assessment dated 2nd January, 1954 rejected both these
claims. The appellant went up in appeal before the
Assistant Collector of Sales Tax, who, in his appellate
order dated 29th October, 1956, accepted the claim of the
appellant in respect of the despatches to its various Depots
or Branches in other States in India, but disallowed the
claim in respect of the alleged inter-State sales. As a
result of partially allowing the claim of the appellant, the
Assistant Collector reduced the tax imposed by a sum of Rs.
19,240-15-6 for the period between 1st April, 1948 to 31st
March, 1950, and Rs. 97,208/for the second period between
1st April, 1950 to 31st March, 1951, and directed refund of
these amounts to the appellant. The revisions filed by the
appellant against the rejection of its claim in respect of
inter-State sales were still pending, when, on 7th January,
1963, a notice was issued by the Deputy Commissioner of
Sales Tax, Bombay City Division, in Form XXIV under
495
section 31 of the Bombay Sales Tax Act, 1953, intimating the
appellant that he proposed to revise suo motu the appellate
orders passed by the Assistant Collector of Sales Tax
insofar as he had allowed deduction, in respect of the
entire goods despatched to its Branches in other States
outside Maharashtra, because, in so doing, he had overlooked
the provisions contained in proviso (b) to sub-clause (ii)
of Rule 1 under sub-section (3) of section 6 of the Bombay
Sales Tax Act, 1946 as amended by the Bombay Sales Tax
Amendment Act 48 of 1949. On receipt of this notice, the
appellant put in appearance before the Deputy Commissioner,
who is the respondent in this appeal, and raised several
objections against the proposed revisional proceedings,
making a request that the proceedings be dropped. Since the
respondent did not accept this request, the appellant filed
a petition under Article 226 of the Constitution in the High
Court of Bombay challenging the notice dated 7th January,
1963, with the prayer that the notice be quashed and the
respondent be restrained from taking any action against the
appellant in pursuance thereof. The petition was dismissed
by the High Court and, now, on certificate granted by that
Court, the appellant has come up in this appeal to this
Court.
In this appeal, Mr. S. T. Desai, appearing on behalf of the
appellant, urged the same objections against the notice
which were the basis of the prayer for writ in the High
Court, and we proceed to deal with them in the order in
which he has put them forward before us in his submissions.
The first point urged by learned counsel was that, in
exercise of the revisional powers, the Deputy Commissioner
of Sales Tax, whether acting under the Sales Tax Act of
1946, or of 1953, or of 1959, could only proceed to take
action on the basis of the material already present on the
record and was not entitled to act on conjecture or to
institute any enquiry so as to include additional material
in order to judge the correctness of the order sought to be
revised. In support of this proposition, learned counsel
referred us to a decision of the Andhra Pradesh High Court
in State of Andhra Pradesh v. T. G. Lakshmaiah Setty &
Sons.(1). In that case, the Deputy Commissioner, in
exercising the revisional jurisdiction, was found by the
High Court to have based his assessment on guess-work, and
the Court held that “this conjecture could not be a
_justification for seeking to revise the order of the
assessing authority. If the Deputy Commissioner could, on
the material before him, find data for revising the
assessment, it was open to him to do so. It must be made
clear that he has no jurisdiction to travel beyond the
record that is available to the assessing authority and the
basis should be found on the record already in existence.”
We are unable to accept this principle laid down, by that
High Court as
(1) 12 S.T.C. 663.
496
correct. Whenever a power is conferred on an authority to
revise an order, the authority is entitled to examine the
correctness, legality and propriety of the order and to pass
such suitable orders as the authority may think fit in the
circumstances of the particular case before it. When
exercising such powers, there is no reason why the authority
should not be entitled to hold an enquiry or direct an
enquiry to be held and, for that purpose, admit additional
material. The proceedings for revision, if started suo
motu, must not, of course, be based on a mere conjecture and
there should be some ground for invoking the revisional
powers. Once those powers are invoked, the actual
interference must be based on sufficient grounds and, if it
is considered necessary that some additional enquiry should
be made to arrive at a proper and just decision, there can
be no bar to the revising authority holding a further
enquiry or directing such an enquiry to be held by some
other appropriate authority. This principle has been
clearly recognised by this Court in The State of Kerala v.
K. M. Cheria Abdulla and Company(1). In that case, sub-
section (2) of s. 12 of the Madras General Sales Tax Act,
1939, which came up for interpretation, empowered the Deputy
Commissioner, suo motu or under certain circumstances on an
application, to call for and examine the record of any order
passed or proceeding recorded under the provisions of that
Act by any officer subordinate to him, for the purpose of
satisfying himself as to the legality or propriety of such
order, or as to the regularity of such proceeding, and to
pass such order with respect thereto as he thought fit.
This Court held :-
“There is no doubt that the revising
authority may only call for the record of the
order or the proceeding, and the record alone
may be scrutinised for ascertaining the
legality or propriety of an order or
regularity of the proceeding. But there is
nothing in the Act that for passing an order
in exercise of his revisional jurisdiction, if
the revising authority is satisfied that the
subordinate officer has committed an
illegality or impropriety in the order or
irregularity in the proceeding, be cannot make
or direct any further enquiry.”
It was further held
“It is, therefore, not right baldly to
propound that, in passing an order in the
exercise of his revisional jurisdiction, the’
Deputy Commissioner must, in all cases, be
restricted to the record maintained by the
officer subordinate to him, and can never make
enquiry outside that record.”
(1) [1965] 1 S.C.R. 601.
497
While thus explaining the scope of the revisional power, the
Court also indicated the limitations within which such power
can be exercised, holding :-
” It would not invest the revising authority
with power to launch upon enquiries at large
so as either to trench upon the powers which
are expressly reserved by the Act or by the
Rules to other authorities or to ignore the
limitations inherent in the exercise of those
powers. For instance, the power to reassess
escaped turnover is primarily vested by rule
17 in the assessing officer and is to be
exercised subject to certain limitations, and
the revising authority will not be competent
to make an enquiry for reassessing a taxpayer.
Similarly, the power to make a best judgment
assessment is vested by section 9 (2) (b) in
the assessing authority and has to be
exercised in the manner provided. It would
not be open to the revising authority to
assume that power.” (p. 887).
In the present case, the notice issued by the Deputy Commis-
sioner of Sales Tax, on the face of it, discloses the
reasons which led him to take proceedings for exercising his
revisional powers suo motu, and it cannot be said on those
facts that he was acting merely on conjecture. The Deputy
Commissioner has not yet proceeded further under the notice
to make the assessment. We have no doubt that, when the
Deputy Commissioner does make an enquiry, if any, for the
purpose of exercising his revisional powers, he will keep
within the limitations indicated by this Court in the case
cited above. The notice cannot be quashed or the
proceedings restrained merely on the ground that the Deputy
Commissioner may have to hold some enquiries in order to
properly exercise his revisional jurisdiction. Mr. Desai on
behalf of the appellant emphasised the circumstance that in
s. 12(2) of the Madras General Sales Tax Act, which was
considered by this Court, the Deputy Commissioner’s power
was expressed by stating that he may pass such order as he,
thinks fit, while no such words occur in the corresponding
provisions in the Bombay Sales Tax Acts with which we are
concerned, but we do not think that this circumstance makes
any difference. A revising authority necessarily has the
power to make such order as, in the opinion of that
authority, the case calls for when the authority is
satisfied that it is an appropriate case for interference in
exercise of revisional powers. In fact, in S. 12(2) of the
Madras General Sales Tax Act, the Deputy Commissioner, when
exercising his powers, was to call for the record of the
order or proceeding before passing any order which he
thought fit, so that there was an expression used which
could have been interpreted as limiting his powers to the
examination of the record only without holding any further
498
enquiry, and, yet, this Court held that the, Deputy
Commissioner could not be restricted to the record and was
empowered to make an enquiry outside that record. In the
provisions relating to revisions in the three Bombay Sales
Tax Acts, there are no such words indicating any limitation;
and that would be an additional reason for holding that
there can be no bar to an appropriate enquiry being held by
the Deputy Commissioner when seeking to exercise his
revisional powers suo motu.
The next point urged by learned counsel was that the notice
in question was issued on the 7th January, 1963, when the
Act of 1959 had already come into force and the Act of 1953
had been repealed, so that if any revisional jurisdiction
could be exercised by the Deputy Commissioner, it could only
be under the Act of 1959 and not under the Act of 1953. On
this basis, advantage was sought to be taken of the
circumstance that, under the Act of 1959, the revisional
powers conferred by s. 57 can be exercised within five years
from the date of the order sought to be revised and, at the
relevant time in 1963, could only be exercised within two
years from the date of that order. The order sought to be
revised was passed on 29th October, 1956, so that the notice
to exercise revisional powers was being issued more than 6
years after that order had been passed. It appears to us
that this submission is adequately met by the provisions
contained in s. 77 of the Act of 1959. The Act of 1953 was
repealed by s. 76 of the Act of 1959 and then s. 77 lays
down :
“(1) Notwithstanding the repeal by s. 76 of
any of the laws referred to therein,-
(a) those laws (including any earlier law
continued in force under any provisions
thereof), and all rules, regulations, orders,
notifications, forms and notices issued under
those laws and in force immediately before the
appointed day shall, subject to the provisions
of s. 42 continue to have effect for the
purposes of the levy, assessment,
reassessment, collection, refund or set-off of
any tax, or the granting of a draw-back in
respect thereof, or the imposition of any
penalty, which levy, assessment, reassessment,
collection, refund, setoff, draw-back or
penalty relates to any period before the
appointed day, or for any other purpose
whatsoever connected with or incidental to any
of the purposes aforesaid;
499
(3) Without prejudice to the provisions
contained in the foregoing sub-sections and
section thereto, section 7 of the Bombay
General Clauses Act, 1904, shall apply in
relation to the repeal of any of the laws
referred to in section 76 as if the law so
repealed had been an enactment within the
meaning of section 7 of that Act.”
(We have only quoted the portions of s. 77 with which we are
concerned).
The effect of s. 77 (1)(a) is to continue in force the
Bombay Sales Tax Act of 1953 as well as the Bombay Sales Tax
Act of 1946 to the extent to which they were in force when
this Act of 1959 came into force for the purposes mentioned
in that clause. These purposes included levy, assessment,
reassessment and collection of sales-tax, so that the
proceedings against the appellant, which had been initiated
under the Act of 1946, continued to be governed by the
provisions of that Act. Section 7 of the Bombay General
Clauses Act 1 of 1904, which was made applicable ‘by s.
77(3) to the repeal of the Act of 1953, includes the
following provisions : –
” Where this Act, or any Bombay Act, or Maha-
rashtra Act, made after the commencement of
this Act, repeals any enactment hitherto made
or hereafter to be made, then, unless a
different intention appears, the repeal shall
not-
(c) affect any right, privilege, obligation
or liability acquired, accrued or incurred
under any enactment so repealed; or
(e) affect any investigation, legal
proceeding or remedy in respect of any such
right, privilege, obligation, liability,
penalty, forfeiture or punishment as
aforesaid, and any such investigation, legal
proceeding or remedy may be instituted,
continued or enforced, and any such penalty,
forfeiture or punishment may be imposed, as if
the repealing Act had not been passed.”
Very clearly, the repeal of the Act of 1953 by the Act of
1959 did not affect the rights and liabilities of the
assessee to tax under the Act of 1953 or the Act of 1946 in
respect of the turnover which became liable to sales-tax
under the Act of 1946. The effect of clause (e) of s. 7 of
the Bombay General Clauses Act
500
further is that any legal proceeding in respect of levy,
imposition or recovery of that tax is to continue and any
fresh investigation, legal proceeding or remedy could be
instituted as if there had been no repeal by the Act of
1959. Consequently, the repeal of the Act of 1953 did not
in any way affect the power of the Deputy Commissioner to
institute proceedings for revision suo motu against the
appellate order of the Assistant Collector which had been
passed in exercise of his powers under the Act of 1946. It
is true, as urged by Mr. Desai in the alternative, that, in
fact, the proceedings should have been taken not under S. 31
of the Act of 1953, but under S. 22 of the Act of 1946.
This is so, because when the Act of 1946 was repealed by the
Act of 1953, similar provisions were made in the Act of 1953
to continue in force the provisions of the Act of 1946 in
respect of rights and liabilities which may have accrued or
have been incurred under the Act of 1946. Section 48(2) and
S. 49(1) clearly contained provisions indicating that, in
respect of a liability to tax under the Act of 1946, the
rights and liabilities of the assessee had to be determined
in accordance with the provisions of the Act of 1946 and all
legal proceedings or remedies in respect thereof had also to
be taken under the same Act. Consequently, the Deputy
Commissioner, in seeking to exercise revisional powers
against the order of the Assistant Collector passed under
the Act of 1946, had to proceed under S. 22 of the Act of
1946. That, however, is not at all material, because the
provisions of S. 22 of the Act of 1946 are quite similar to
those of s. 31 of the Act of 1953. The mere incorrect
mention of S. 31 of the Act of 1953 in the notice is
immaterial. The Deputy Commissioner has the jurisdiction
and power to revise the order under S. 22 of the Act of 1946
and, consequently the proceedings initiated by him are not
without jurisdiction.
The last submission made by Mr. Desai was that, if it be
held that the revisional powers are sought to be exercised
under the Act of 1946, it should be held that the
proceedings sought to be instituted are barred by time,
because limitation of a reasonable time, within which the
revisional powers are to be exercised, must be implied in
the statute itself. Section 22 of the Act of 1946 and s. 31
of the Act of 1953 do not lay down any limitation for
exercise of the power of revision by a Deputy Commissioner
sue motu, and we are not prepared to accept that any such
limitation must be necessarily read in the two Acts. In
support of his proposition that such a limitation must be
read by us, Mr. Desai referred to the decision of this Court
in the State of Orissa v. Debaki Debi and Others(1). That
case, however, has no relevance at all, because, in the
Orissa Sales Tax Act, there was a proviso in general terms
laying down that no order “assessing the
(1) 15 S.T.C. 153.
501
amount of tax shall be passed after the lapse of 36 months
from the expiry of the period”, and it was held that this
provision was, in substance, not a real proviso to the
section in which it was placed, but was, in fact, a period
of limitation prescribed for all orders of assessment made
under any other provision of the Act. In the Bombay Sales
Tax Acts of 1946 and 1953, there is no such general
provision prescribing a period of limitation for making an
assessment and, even though the effect of the order of the
Dy. Commissioner passed in revision may be to bring about
an assessment to tax of turnover which was set aside by the
Assistant Collector in appeal., such an assessment does not
come under any provision relating to limitation.
The decision of the Bombay High Court in Commissioner of
Income-tax, Bombay City 1 v. Narsee Nagsee & Co. (1) is also
similarly inapplicable. In that case, section 11 of the
Business Profits Tax Act, 1947, which had no limitation
prescribed for an order of assessment, was held to be
governed by the 4 years’ period of limitation which was
prescribed under s. 14 for issue of a notice for
reassessment. The decision in that case turned on the fact
that, if proceeding for reassessment could not be started
after the expiry of four years from the end of the
chargeable accounting period concerned, it would be totally
unreasonable to hold that the first assessment of tax can be
made after the expiry of that period. The case before us
relates to exercise of revisional powers and does not deal
with the question of the first assessment to be made when
the Return is initially filed by an assessee. In fact, when
a revisional power is to be exercised, we think that the
only limitations, to which that power is subject, are those
indicated by this Court in K. M. Cheria Abdulla & Co’s(2)
case. These limitations are that the revising authority
should not trench upon the powers which are expressly
reserved by the Acts or by the Rules to other authority and
should not ignore the limitations inherent in the exercise
of those powers. In the present case, the Deputy
Commissioner, when seeking to exercise his revisional
powers, is clearly not encroaching upon the powers reserved
to other authorities. Under the Act of 1946, the first
assessment is made by the Sales-Tax Officer under S. 11. If
information comes into his possession that any turnover in
respect of sales or supplies of any goods chargeable to tax
has escaped assessment in any year or has been under-
assessed or assessed at a lower rate or any deductions have
been wrongly made therefrom, proceedings can be taken afresh
under S. 11A. On the face of it, if a first assessment
order is made under s. 11 and any turnover escapes
assessment, the appropriate provision, under which action is
to be taken for assessing that turnover to tax, is S. 11A.
There is, however, no provision under which the power now
sought to be exercised by
(1) 31 I.T.R. 164.
(2) [1965] 1 S.C.R. 601.
502
the Deputy Commissioner in the case before us could have
been exercised by any other authority. In this case, as we
have indicated earlier, the first assessment of tax was made
by the Sales Tax Officer, and the turnover now in question
was assessed to tax by him. Having once assessed- that
turnover to tax, he could .not initiate a fresh proceeding
in respect of it under s. 11A. The ,assessment made by him
was set aside in appeal by the Assistant Collector and it is
this order of the Assistant Collector which is sought to be
revised by the Deputy Commissioner. This is, therefore, not
a case where the powers are being exercised for the purpose
of assessing or reassessing an escaped turnover. The case
is one where the revisional powers are sought to be
exercised to correct what appears to be an incorrect order
passed in appeal by the Assistant Collector, and, for such a
purpose, proceedings could not possibly have been taken
under s. 11A. In exercising his revisional powers,
therefore, the Deputy Commissioner is not encroaching upon
the jurisdiction of any other authority specially entrusted
with taking such proceedings.
In this connection, Mr. Desai relied on a decision of the
Bombay High Court in Manordas Kalidas v. V. V. Tatke(1).
The decision in that case also related to this very Act of
1946, but the point to be kept in view is that in that case,
the revisional power was sought to be exercised in respect
of the original assessment order passed by the Sales Tax
Officer under S. 11 of the Act. It was in these
circumstances that the Bombay High Court, after referring to
its two decisions in Bisesar House v. State of Bombay (2 and
Commr. of Income-tax v. Narsee Nagsee & Co. held :-
,,In neither of those two cases, revisional
powers were sought to be exercised, but the
principle of those cases must, in our
judgment, apply for the same reasons to the
exercise of revisional jurisdiction, and that
jurisdiction must be exercised w
ithin a
reasonable period, and the yard-stick of
reasonableness will be the period prescribed
for re-assessment.”
It appears that in view of the fact that proceedings for re-
assessment could have been taken under s. 11A in that case
and, instead, revisional powers were sought to be exercised,
that Court held that the exercise of such revisional powers
must be, governed by the same limitation which applied to
the exercise of power of reassessment. In fact, the correct
principle that should have been applied in that case is the
principle mentioned by us earlier laid down in K. M. Cheria
Abdulla & Co.(4). The revision should have been held to be
incompetent on the ground that the power
(1) 11 S.T.C. 87. (2) 9 S.T.C. 654.
(3) 31 I.T. R. 164. (4) [1965] 1 S.C.R. 601.
503
was sought to be exercised for assessment of escaped
turnover which had not ‘been assessed at all at the initial
stage of -assessment under s. 11 and proceedings under s.
11A could have been competently initiated for bringing that
turnover to tax. Instead, the Court equated the proceeding
in revision with the proceeding for reassessment and applied
the 4-year period of limitation which was prescribed only
for reassessment and not for exercise of revisional power.
In our opinion, the ultimate decision in that case was
perfectly correct, but we are unable to affirm the vie,%,
that the revisional power is governed by any period of
limitation laid down in s. 11A for proceedings for
reassessment of escaped turn over.
Reference, in this connection, was also made to a decision
of this Court in Maharaj Kumar Kamal Singh v. Commissioner
of Income-tax, Bihar and Orissa(1), in which the Court dealt
with a case of an assessee whose income to the extent of Rs.
93,604/representing interest on arrears of rent was omitted
to be brought to assessment by the Income-tax Officer.
Subsequently, in another case, the Privy Council held that
interest on arrears of rent payable in respect of
agricultural land was not agricultural income and,
consequently, the Income-tax Officer initiated reassessment
proceedings under s. 34(1) (b) of the Income-tax Act. The
circumstance relied upon by learned counsel for the
appellant was that the omission by the Income-tax Officer to
bring to assessment that interest was part of an order made
by him after his initial assessment order had been set aside
by the Appellate Assistant Commissioner who directed a fresh
assessment, allowing the appeal against that order. In that
case, it was held that the escaped income could be brought
to tax under s. 34 of the Income Tax Act; and, on the basis
of this decision, it was urged that, similarly, in the
present case, the turnover now sought to be brought to tax
in exercise of revisional powers could be re-assessed under
s. 11A. This argument ignores the circumstance that, in
that case, the last order, under which the income from
interest had been exempted from tax, was an order made by
the Income Tax Officer himself, though after the assessment
proceedings had been remanded to him by the Appellate
Assistant Commissioner. Since the income had escaped
assessment under an order passed by the Income-tax Officer
himself, he could competently take proceedings under section
34. In the case before us, the turnover of the assessee now
sought to be taxed in the revisional proceedings did not
escape liability to tax under the orders of the Sales-tax
Officer and, on the other hand, was actually taxed by him,
which imposition of tax was set aside in appeal.
Consequently, the Sales Tax Officer could not possibly take
proceedings under s. II A in respect of that turnover.
(1) 35 I.T.R. 1.
504
For these reasons, we hold that the proceedings initiated by
the Deputy Commissioner of Sales Tax against the appellant
are not incompetent and the High Court was right in refusing
the writ sought by the appellant. The appeal fails and is
dismissed with costs.
R.K.P.S. Appeal dismissed.
L1Sup.Cl/68 -15-10-68-GIPF.-
505