Indian Kanoon - Search engine for Indian Law

9. Eventhough Section 17(5A) does not suffer from the infirmities pointed out by the petitioners, I feel there are inherent infirmities in the orders issued Under Section 17(5A) and challenged in these cases. In the first place, Section 17(4) originally provided a bar against assessment for any assessee for the year during which there was either levy of penalty or payment of compounding fee. However, this was removed by an amendment making those assessees on whom penalty was levied or who have paid compounding fee also eligible for assessment Under Section 17(4). This amendment clearly presupposes that any assessee who files form No. 21CC under Rule 18A(1A) with supporting documents opting for assessment Under Section 17(4) after being subjected to penalty or compounding fee should be deemed to have included the turnover for the whole year including the turnover pertains to offence which either led to levy of penalty or payment of compounding fee. On scrutiny of form No. 21CC and the supporting documents, it is open to the officer to accept the request of the assessee and complete the assessment Under Section 17(4) or to reject the claim. If the Officer either omitted to note the payment of compounding fee or levy of penalty on the assessee prior to completion of assessment Under Section 17(4) based on form No. 21CC filed, or if the Officer wants to verify as to whether the assessee even after payment of compounding fee or after levy of penalty included the turnover attributable to the same or whether the accounts in cases of such assessees were full and complete based on which return and form 21CC were filed and assessment completed, then it is open to the Officer to call for the accounts and scrutinise the same and if the Officer is satisfied that there is escapement of turnover in the assessment completed Under Section 17(4), the Officer has to issue notice Under Section 19(1) and proceed for assessment after following the procedure. An assessee who has paid compounding fee or has been subjected to penalty has to establish that inspite of such proceedings he has returned full turnover in the annual return and form No. 21CC filed subsequently, based on which the assessment Under Section 17(4) was completed. Under the scheme of Section 17(4), I feel an assessee who opted for and obtained assessment Under Section 17(4) and who was subjected to penalty or who has paid compounding fee during the relevant year has the burden on him to establish before the officer as and when demanded that the turnover returned for the assessment was full and complete. In other words, reassessment Under Section 19(1) after Section 17(4) assessment in such cases can be completed by rejection of accounts and by estimation of turnover only after scrutiny of accounts and after establishing escapement of turnover in the original assessment. If after scrutiny of accounts, reassessment is made Under Section 19(1) revising the tax originally assessed then of course the penalty Under Section 17(5A) will follow.

1. The penalty levied Under Section 17(5A) should be revoked in cases-

(a) where the assessees have not opted for assessment Under Section 17(4) by filing form No. 21CC but assessments were completed by the assessing officers following the circulars, 28 of 1995 and 30 of 1999 issued by the Commissioner of Commercial Taxes.

(b) Where reassessments were completed Under Section 19(1) by making additions merely based on penalty levied or compounding fee paid, prior to filing of form No. 21CC and completion of assessment Under Section 17(4) based on it.

2. In cases covered by Clause 1(a) above, it is open to the Officer to consider penalty Under Section 45A of the Act after following the procedure prescribed therein.

3. In cases covered by Clause (b), it is open to the Officer to consider reassessment in accordance with the observations and directions contained in paragraph 9 above and if reassessment is made after establishing that the turnover has escaped assessment completed Under Section 17(4) then the Officer has to demand penalty along with revised demand of tax Under Section 17(5A) of the Act. If the assessee establishes in the course of re-assessment that inspite of payment of compounding fee or levy of penalty, the assessee returned full turnover making up for the prior omissions also in form No. 21CC, then of course reassessment itself is not required and so much so levy of penalty Under Section 17(5A) does not arise.