JUDGMENT S.C. Manchanda, J.
1. This is a case stated under Section 11(1) of the U.P. Sales Tax Act (hereinafter referred to as the Act).
2. The question referred is as follows :
Whether for assessment under Section 21 for 1954-55 for which four years limitation expired on 31st March, 1959, respecting which Section 21 proceedings started on an information of suppression of bales imported to the tune of 36 in number respecting which service had been effected within four years, can in this assessment proceeding under Section 21 additional information received after 31st March, 1959, be utilised so as to pass the assessment under Section 21 not only based on the initial information of suppression of 36 bales imported but taking into consideration the subsequent information of 350 bales as well which information was received after the expiry of four years?
3. The material facts are these : The assessee is a cloth dealer carrying on business at Bareilly. The relevant year of assessment is 1954-55. Assessment proceedings under Rule 41(5) read with Section 7 were completed on the 31st July, 1956. The turnover was determined as a result of a best judgment assessment at Rs. 1,92,000. Thereafter, the assessing officer received information a little prior to 6th of March that 36 bales had been imported by the assessee of which the Sales Tax Officer had no knowledge at the time of the original assessment. The four years' period of limitation was to expire on the 31st March, 1959, and prior thereto on the 10th March, 1959, a notice under Section 21 was issued. This was served on the assessee on the same date. In response to the said notice the dealer put in appearance on the 14th March, 1959, and asked for time to furnish certain details. The matter remained pending till the 3rd February, 1960, when the statement of the dealer was recorded and the case was fixed for the 18th February, 1960. In the meantime further information was received that besides these 36 bales, 350 more bales had been received which were also not taken into consideration at the time of the original assessment. Consequently, on the 18th February, 1960, the assessee was confronted with this information and the statement of the dealer was once again recorded. Ultimately, a best judgment assessment under Section 21 was made on the 5th of March, 1960, whereby the turnover was determined at Rs. 4,08,000, as against Rs. 1,92,000 as originally determined in the assessment under Rule 41(5). Against this assessment an appeal was preferred.
4. Two main points were taken: (1) that the proceedings under Section 21 should be restricted to the 36 bales regarding which the Sales Tax Officer had information at the time the notice was issued and he could not have taken into consideration the information regarding 350 bales which were received after the period of four years within which the notice under Section 21 could have been issued; and (2) that there was no basis for the determination of the turnover at Rs. 4,08,000. The Judge (Appeals) repelled the first contention holding that it was not obligatory upon the Sales Tax Officer to disclose the basis for initiating proceedings under Section 21 so long as he had reasonable ground to believe that the turnover had escaped assessment. On the second question, however, the Judge (Appeals) considered that it was obligatory upon the Sales Tax Officer to disclose the basis for determining the turnover at Rs. 4,08,000. He, therefore, remanded the case for reassessment in the light of the observations made by him. Against the order of remand a revision was filed by the assessee. Before the Judge (Revisions) the order of remand was attacked on the ground that as the information with respect to the remaining 350 bales was not received within four years and as no fresh notice under Section 21, in respect there of, could have been issued, it could not be taken into consideration while making the assessment under Section 21. On merits, the Judge (Revisions) was satisfied that the remand directed by the judge (Appeals) was called for. Hence this reference at the instance of the assessee.
5. The learned counsel for the assessee attempted to argue that as the original assessment was based on a best judgment assessment, under Rule 41(5), another assessment on the basis of a best judgment assessment could not be made under Section 21. No such question was argued, nor at the present moment has any assessment under Section 21 been made. The original assessment has been set aside, and therefore no such question can be said to arise out of the order of the Judge (Revisions).
6. The only question is as to whether, when proceedings have been taken within the period of limitation prescribed under Section 21, upon reasonable belief that some income has escaped assessment, and before the period of one year provided for completing such assessment expires, further information is received that certain other items had also escaped assessment, then can those items be taken into consideration or not. Section 21 is clear. The only condition for taking action thereunder is that the assessing authority has reason to believe that the whole or any part of the turnover of the dealer has, for any reason, escaped assessment. It does not require a reason to believe that a particular turnover has escaped assessment. As long as some turnover has escaped assessment and the reason entertained by the Sales Tax Officer is reasonable and further that such notice has been issued within the period of four years then there is no bar in taking into consideration other items which may come into his possession after the issue of the notice but before the further period of one year for completing such assessment has expired. There is ample authority for the view that we are taking under the analogous provisions of the Income-tax Act: see Muthappa Chettiar v. Commissioner of Income-tax [1938] 6 I.T.R. 725, Seth Kalekhan Mahomed Hanif v. Commissioner of Income-tax [1963] 50 I.T.R. 1 and Pulavarthi Viswanadham v. Commissioner of Income-tax [1963] 50 I.T.R. 463. In all these cases it has been laid down that once the assessment is reopened under Section 34 the Income-tax Officer is not limited to the information which he had received and on the strength of which he had asked for a reopening of the case and reassessment of the assessee, and if he thereafter discovers that some other items of income have escaped assessment then he is entitled to take them also into account and assess them if they had not for any reason been assessed earlier.
7. For the reasons given above, we answer the question in the affirmative and against the assessee. The assessee will pay the costs of this reference which we assess at Rs. 100. Counsel's fee is also assessed at Rs. 100.