2014 (7) TMI 969 - HC - VAT and Sales Tax

Rajasthan Tax Board Upholds Assessment Order, Emphasizes Distinction Between Errors of Judgment and Escaping Assessments

The Rajasthan Tax Board's decision to set aside an assessment order and impose tax, interest, and penalty on the respondent-assessee was upheld by the ... Levy of tax, penalty & Interest - Held that:- Tax Board has rightly distinguished between an escaping of assessment and error of judgment by the assessing authority and held that the remedy for an error of judgment by the assessing authority lay in filing a revision petition under section 15(1) of the Act of 1954 before the Commissioner and not by way of resorting to section 12 of the Act of 1954 for recovering escaped tax. In the facts of the case, it is admitted that there was full disclosure by the assessee including profit accrued. Yet profit accrued was not taxed owing to an error of judgment by the assessing officer - no substantial question of law is made out for entertaining the present revision petition - Decided against assessee. Issues:1. Challenge to order setting aside assessment and imposing tax, interest, and penalty.2. Interpretation of provisions under the RST Act, 1954 regarding tax assessment.3. Distinguishing between escaping assessment and error of judgment by assessing authority.4. Remedies available for rectifying errors in assessment orders.Analysis:The case involved a revision petition challenging an order passed by the Rajasthan Tax Board, which set aside an assessment order and imposed tax, interest, and penalty on the respondent-assessee for the assessment years 1991-92 and 1992-93. The assessing authority initially did not include the profit disclosed by the contractor in the taxable turnover, believing it to be exempt from tax. However, following a Supreme Court judgment, the assessing authority reopened the assessments and levied tax on the profit amount, along with interest and penalty. The Deputy Commissioner upheld this decision, but the Tax Board noted that it was an error of judgment by the assessing authority, not an escaping assessment. The Tax Board held that errors of judgment should be rectified through a revision petition under section 15(1) of the Act, not by invoking section 12 for recovering escaped tax.The judge, in his analysis, agreed with the Tax Board's distinction between escaping assessment and error of judgment by the assessing authority. He emphasized that the remedy for an error of judgment lies in filing a revision petition before the Commissioner, not through section 12 for escaped tax recovery. Despite full disclosure by the assessee, the profit was not taxed due to an error of judgment by the assessing officer. Therefore, the judge concluded that no substantial question of law was raised in the revision petition and dismissed it accordingly. This judgment highlights the importance of differentiating between errors of judgment and escaping assessments in tax matters, as well as the appropriate legal remedies available for rectification.