Case: State of Uttar Pradesh Vs. M/s. Manohar &amp; Co., Bareilly

2. The assessee was a dealer in imported Vanaspati oil and Kirana. It started its business in the yearbut in that year it carried on business only for a part of the year. In respect of its turnover for that year, the assessment was made for the broken period under S. 18 (3) of the Act as it then stood. For the assessment yearthe assessee submitted quarterly returns. The assessing authority accepted the returns submitted by the assessee and assessed him on the basis of those returns. That assessment was not challengd by the assessee. Thereafter the assessing authority received information that some part of the turnover of the assessee had escaped assessment. Consequently a notice under S. 21 of the Act was issued and the escaped turnover was brought to assessment on the basis of best judgment assessment. The escaped turnover was determined at Rupees three lacs. The assessee challenged this reassessment before the Judge (Appeals). It contended before the Judge (Appeals) that the reassessment in question is invalid inasmuch as the assessing authority did not comply with the mandatory requirements of S. 18 (4) of the Act. Though the Judge (Appeals) found some force in that argument, it rejected the appeal of the assessee on the ground that as it had not challenged the original assessment, it was not open to it to challenge the reassessment made. Thereafter the assessee took up the matter in revision to the Board of Revenue but the Board also rejected the revision petition of the assessee on the ground that it is not open to it to challenge the reassessment as it had submitted to the original assessment. But at the instance of the assessee the Judge (Revisions) referred the two questions mentioned earlier for the decision of the High Court. The reference was first heard by a Division Bench of the Allahabad High Court consisting of Manchanda and Beg JJ. Manchanda J. answered those questions in favour of the assessee whereasBeg J. answered those questions against the assessee. Thereafter the matter was placed before Oak J. who agreed with the view taken by Manchanda J.

Reasoning: In view of that decision, it was agreed by the Counsel for the parties that the first question has to be answered in the negative and in favour of the assessee. From that decision it follows that an assessment in contravention of S. 18 (4) of the Act though in conformity with Rule 39 is an invalid assessment.7. Now coming to the second question, the fact that the assessee was illegally assessed originally without challenge does not confer power on the Department to continue that illegality in the reassessment proceedings. Section 18 (4) applies to assessments under S. 21 as well. No separate procedure is prescribed by the Act for assessments under S. 21. Further there can be no estoppel against statute. While dealing with question No. 2. it is not necessary for us to decide as to the validity of the original assessment. In this appeal we are only concerned with the