Andhra Pradesh High Court: Pleadings On Suppression Of Facts And Wilful Evasion Of Tax Essential For Invoking S.21(5) Of VAT Act
Andhra Pradesh High Court: Pleadings On Suppression Of Facts And Wilful Evasion Of Tax Essential For Invoking S.21(5) Of VAT Act
The Andhra Pradesh High Court has ruled that the suppression of material facts must be clearly pleaded in an assessment order for Section 21(5) of the Act to apply, extending the limitation period for filing an assessment order from 4 years to 6 years.
Justice R. Raghunandan Rao and Justice Harinath N. observed that the assessment order lacked any mention of suppression of facts, let alone willful suppression leading to tax evasion, which is essential for invoking Section 21(5). Therefore, the court held that the limitation period should remain four years, as prescribed under Section 21(4).
The order came in response to a writ petition filed by Chakka Enterprises, challenging the assessment order, as well as the attachment of its bank account and immovable property by the Commercial Tax Officer, Addanki Circle. The petitioner’s main contention was that the tax period ended in 2017, and the assessment order should have been passed within the four-year limit set under Section 21(4). However, the order was issued beyond the limitation period, and the petitioner was only notified after the attachment of property.
The counsel for the Assessing Officer argued that the petitioner had deliberately avoided service, and the notices had been sent to the last known business address by registered post, which the petitioner had received. Furthermore, the counsel claimed that the assessment order was based on the best judgment assessment due to the petitioner’s failure to provide the required books of accounts and material. This, according to the counsel, warranted the invocation of Section 21(5) and the extension of the limitation period.
However, the bench noted that the order relied on the returns filed by the petitioner, making the claim of missing material unjustified. The court also pointed out that there was no mention of suppression of material facts in the assessment order, a critical factor for invoking Section 21(5).
In conclusion, the High Court allowed the writ petition, set aside the assessment order and penalty notice, and granted all consequential reliefs to the petitioner.
