‘Audit Objection’ cannot be construed as ‘Information’ within the meaning of Section 19 of the Bihar Finance Act, 1981.
The Supreme Court of India yesterday ruled that, Assessment Proceedings cannot be re-open on the basis of Audit Objection.
The bench also observed that, ‘Audit Objection’ cannot be construed as ‘Information’ within the meaning of Section 19 of the Bihar Finance Act, 1981.
The Supreme Court was answering the question “whether on the information given by the audit team of the Auditor General, Bihar, the Assessing Authority was satisfied that reasonable ground exists to believe that a part of the turnover of the appellant-Company has escaped assessment within the meaning of Section 19 of the State Act based on which the assessing officer can re-open the assessment? .
The Appellant M/s Larsen & Toubro Ltd was filed Special Leave Petition against High Court order upholding a re-assessment order dated 27.02.2006 was passed by the Deputy Commissioner, Commercial Taxes, Urban Circle, Jamshedpur whereby an additional demand of Rs. 35,72,475/- was created against the appellant-Company.
The division comprising of Justice Madan B Lokur and Justice R.K Agrawal has allowed the contention that, the order of re-assessment dated 27.02.2006 is illegal and the assessment proceedings cannot be re-opened on the basis of audit objection, as the same does not amount to ‘information’ as contemplated under Section 19 of the State Act. The impugned order amounts to change of opinion on the same set of facts and law which were available even at the time of passing the order of assessment.
The division bench observed that, “The expression ‘information’ means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or having a bearing on the assessment. We agree that a mere change of opinion or having second thought about it by the competent authority on the same set of facts and materials on the record does not constitute ‘information’ for the purposes of the State Act. But the word “information” used in the aforesaid Section is of the widest amplitude and should not be construed narrowly”.
While setting aside the order of High Court the Court also observed that, “From a perusal of the last paragraph of the aforementioned report of the audit party, the Assessing Officer was not satisfied on the basis of information given by the audit party that any of the turnover of the appellant-Company had escaped assessment so as to invoke Section 19 of the State Act”.
Concluding the Judgment, the Court added, “an order passed by the Deputy Commissioner, Commercial Taxes, Urban Circle, Jamshedpur is without jurisdiction and the High Court was not right in dismissing the petition filed by the appellant-Company”.
Read the full text of the Judgment below.
