TaxTMI 
TaxTMI 
2008 (10) TMI 619
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....aining to two assessment years. A Division Bench of this court, which heard the cases, felt that the order of the Tribunal in favour of the assessee for one year is based on the decision of this court which was rendered without referring to earlier decisions expressing contrary view. Therefore the Division Bench referred the matter to Full Bench and hence these cases are before us. We have heard Special Government Pleader appearing for the State and counsel appearing for the assessee. Since facts are similar, it is enough we refer to the facts of one case and therefore we refer to the facts which led to STRV No. 133 of 2006 filed by the assessee which pertains to the assessment year 1994-95. The assessee is engaged in jewellery business. In the accounts produced in support of returns though the assessee had conceded substantial sales and gross profit, the result was net loss of Rs. 4,66,906. However, the total loss disclosed before the Income-tax Department was Rs. 1,02,069. In the course of regular assessment, the assessing officer noticed that having regard to the stock-in-trade, and business name of the assessee, the sales turnover returned did not appear to be correct and....
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.... Tribunal in the assessee's own case, which again was based on decision of this court. The question, therefore to be considered, is whether based on facts above stated, the Deputy Commissioner was justified in ordering revision of assessment once completed and got finalised in one round of appeals. In order to appreciate the contention, we have to refer to the relevant section which is extracted hereinbelow: "35. Powers of revision of the Deputy Commissioner suo motu.- (1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner which in his opinion is prejudicial to revenue and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit. (2) The Deputy Commissioner shall not pass any order under subsection (1) if,- (a) the time for appeal against the order has not expired; (b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Co....
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....wever, the Deputy Commissioner exercised jurisdiction under section 35(1) read with section 35(2A) based on specific information of admission of unaccounted sales by the assessee before the income-tax authorities which was accepted by the Settlement Commission. It is seen that specific income of Rs. 15 lakhs was offered by the assessee for assessment before the Income-tax Settlement Commission after declaring that the same represents income from unaccounted sale of jewellery. Estimation of turnover after rejection of books of accounts has to be based on materials. In fact, in appeal reasonableness of estimation or addition of the turnover is tested based on materials on which such estimation is made. Estimation of turnover therefore has two aspects, one is the material based on which it was done, and the other is reasonableness of estimation made based on such materials. A point could be said to have been decided in appeal, only when it arises from the order of assessment which was the subject-matter of appeal. In fact, the information that the assessee offered specific income from unaccounted sales before the income-tax authorities was not available before the Sales Tax Officer an....
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....o loss of tax, such order will be prejudicial to the interest of the Revenue. The Supreme Court in the decision first above referred held that order involving loss of tax is an order prejudicial to the Revenue because the purpose of Revenue is to collect tax. Of course, the words "prejudicial to the interest of revenue" are not always confined to loss of tax. We notice that first above decision is rendered in the context of section 263 of the Income-tax Act wherein suo motu revisional power is conferred on the Commissioner, only if the order involved is not only prejudicial to the interest of the Revenue, but should also be erroneous. However, under section 35(1) of the KGST Act, the Deputy Commissioner is authorised to exercise suo motu revision if the order is prejudicial to Revenue. Since the order involved is an order of assessment which is nothing but determination of tax liability due to the State, such order will be prejudicial, if, but for it's correction in revisional proceedings, it leads to loss of tax. Whatever else may be orders prejudicial to the revenue, we are inclined to hold that assessment leading to loss of tax is an order prejudicial to the interest of the ....