The Commissioner of Income Tax-V vs. Sri D.Manikya Prabhu

1 HIGH COURT OF HIMACHAL PRADESH, SHIMLA

STR No. 9 of 2009 Date of decision: 20th March, 2018 M/s S.D.R. Wines Applicant/Appellant Versus The Additional Excise and Taxation Commissioner & anr.

Respondents _____________________________________________________ Coram: The Hon’ble Mr. Justice Sanjay Karol, Acting Chief Justice The Hon’ble Mr. Justice Ajay Mohan Goel, Judge Whether approved for reporting1 : For the Petitioner : Mr. Goverdhan Sharma, Advocate, For the Respondents: Mr. Ajay Vaidya, Senior Additional Advocate General. _____________________________________________________ _ Per Sanjay Karol, A.C.J. (Oral) At the time of hearing, learned counsel appearing for both the parties contended that substantial question of law involved in the present appeal is not the one which was framed on 4th January, 2010, but 1 Whether Reporters of local newspaper are permitted to see the judgment ?

2 question No. 8, as drawn on page No. 9 of the paper book, which reads as under:- “Whether the objection raised by Audit party is sufficient in meeting with requirement of section 15 of the Himachal Pradesh General Sales Tax Act, 1968 read with Rule 61 so as to enable the assessing authority to frame the reassessment without application of his own mind to the facts and circumstances of the case” ? 2. In the peculiar facts and circumstances of the case, delay of 3 days, which we find none to be there as not at all attributable and as such, it is in this backdrop, the substantial question of law, framed by this Court on 4th January, 2017 was not pressed. 3. Before we deal with the substantial question of law, facts, leading to filing of the present appeal, briefly, are set out as under:- 4. In relation to the financial year 1995-1996 & 1996- 1997, based on audit objection, the revenue passed an order of re- assessment in relation to the assessment, already conducted by an appropriate officer. Such order of re-assessment, dated 24th May, 2003, passed by Assessing Authority, Solan, led to levy of tax ; penalty and interest thereupon. Pursuant thereto, demand notice and challan for a

3 sum of Rs. 12,99,176/- and 1,58,545/- respectively, was to be issued. The assessee preferred an appeal, which came to be dismissed vide order dated 10th May, 2005, passed by Additional Excise & Taxation Commissioner-cum-Appellate Authority (South Zone), Himachal Pradesh in Appeal No. 114, 115/2003-04, titled as M/s S.D.R. Wines, Solan Vs. The Assessing Authority, Solan and thereafter by the Appellate Authority vide order dated 6th October, 2006, passed by Financial Commissioner (Appeals), Himachal Pradesh in Appeal Nos. 150, 151/2005, titled as M/s S.D.R. Wines Vs. The Appellate Authority- cum-Additional Excise & Taxation Commissioner (S.Z.), Shimla. Application filed by the assessee seeking reference, stands rejected by the Chairman of the H.P. Tax Tribunal vide order, dated 11th November, 2009, passed in Reference Application No. 1 of 2007, titled as M/s S.D.R. Wines Vs. The Additional Excise & Taxation Commissioner- cum-Appellate Authority, (SZ), Shimla. 5. Insofar as substantial question of law with which we are now dealing, the issue is no longer res integra for the Hon’ble Supreme Court of India in Indian and Eastern Newspaper Society Vs. Commissioner of Income-Tax, New Delhi 1979 (S.C.) 996 has held as under:-

4 “Therefore, whether considered on the basis that the nature and scope of the functions of the internal audit organization of the income-tax department are co-extensive with that of the Receipt Audit or on the basis of the provisions specifically detailing its functions in the Internal Audit Manual, we hold that the opinion of an internal audit party of the income tax department on a point of law cannot be regarded as “information” within the meaning of s. 147(b) of I.T. Act, 1961” 6. We are conscious of the fact that the said judgment pertains to the provisions, contained under the Indian Income Tax Act. As such, we further refer to the decision, rendered by a Co-ordinate Bench of this Court wherein the question came to be noticed and discussed, in fact on identical facts. In Excise and Taxation Commissioner Vs. Dhani Ram and Sons (2009) 34 PHT 278 (HP), the Court while answering identical question, observed as under:- “3. We have heard learned counsel for the parties and perused the record. As regards issue (I) referred for our judgment, the Financial Commissioner (Appeals) has stated that there was no knew information available to the Assessing Authority for re-assessing the tax liability and that the only basis for re-assessing the liability on the applicant was that there was one notification of 10.03.1988 which has not been taken into account while making the original assessment. A

5 notification issued under the provisions of the Act or the Rules framed thereunder, becomes part of the Act or the Rules, as the case may be and, therefore, ignorance of the Assessing Authority, about such notification at the time of original assessment, cannot be equated with non-availability of entire information. If such a notification comes to the notice of the Assessing Authority subsequently, it cannot be equated with a case of new information coming to the notice of assessing authority. The reason is that ignorance of law is no excuse even for a layman and in the case of a person applying such law, the presumption should apply with manifold vigour. In view of the above stated position, we are of the considered view that the action of Assessing Authority in re-opening the original assessment was not in consonance with the provisions of Section 15(1) of the Himachal Pradesh General Sales Tax Act, 1968 and hence not lawful. Issue is determined accordingly.” 7. It is in this backdrop, the appeal is allowed and order of reassessment dated 24th May, 2003, passed by Assessing Authority, Solan; order dated 10th May, 2005, passed by Additional Excise & Taxation Commissioner-cum-Appellate Authority (South Zone), Himachal Pradesh in Appeal No. 114, 115/2003-04, titled as M/s S.D.R. Wines, Solan Vs. The Assessing Authority, Solan; order dated 6th October, 2006, passed by Financial Commissioner (Appeals), Himachal

6 Pradesh in Appeal Nos. 150,151/2005, titled as M/s S.D.R. Wines Vs. The Appellate Authority-cum-Additional Excise & Taxation Commissioner (S.Z.), Shimla; and order, dated 11th November, 2009, passed by the Chairman of the H.P. Tax Tribunal in Reference Application No. 1 of 2007, titled as M/s S.D.R. Wines Vs. The Additional Excise & Taxation Commissioner-cum-Appellate Authority, (SZ), Shimla are quashed and set aside. 8. Appeal stands disposed of, so also pending applications, if any.

( Sanjay Karol ), Acting Chief Justice 20th March, 2018(K)

( Ajay Mohan Goel ), Judge