@JUDGMENTTAG-ORDER
1. The impugned notice dated 5.5.2001 has been issued by respondent No. 2 in purported exercise of power vesting in him u/s 19(1) of the Bihar Finance Act, 1981. This was followed by the communication dated the 31st July. 2001 from the same respondent. In the communication dated 31.7.2001 the petitioner was asked to furnish some additional information and to file some more documents.
2. A bare look at the impugned notice suggests that in so far as the procedural compliance with Section 19 is concerned, respondent No. 2 clearly appears to have misdirected himself, because even though the notice purportedly appears to be in terms of power vesting in him u/s 19(1) of the Act, the satisfaction of respondent No. 2 that reasonable grounds exist to believe that any exist to believe that any turnover of the petitioner escaped assessment or has been under-assessed or assessed at a rate lower than that which was clearly applicable, etc. etc. has not at all been shown to have been recorded either in the notice itself or in the contemporaneous records. On the other hand, it is an admitted case of the respondents that by a mechanical exercise of the so called jurisdiction, the respondent No. 2 has acted merely on the basis of, and because of an audit objection and, therefore, mechanically, the copy of the audit report has also been sent along with the impugned notice without indicating at all therein whether application of mind with regard to the satisfaction that reasonable grounds exist has been recorded or not. Section 19(l) of the Bihar Finance Act, 1981 reads thus :
"19. Turnover of registered dealer escaping assessment.--(1) If upon information which has come into his possession, the prescribed authority is satisfied that reasonable grounds exist to believe that any turnover of a registered dealer or a dealer to whom grant of registration certificate has been refused under the third proviso to Sub-section (2) of Section 14, in respect of any period has. for any reason, escaped assessment or any turn- over of any such dealer or a dealer assessment under Sub-section (5) of Section 17 has been under assessed or assessed at a rate lower than that which was correctly applicable or any deductions therefrom has been wrongly made, the prescribed authority may, subject to such rules as may be made by the State Government under this part, and-
(a) within eight years (from the date of the order of the assessment or reassessment), where the said authority has reasons to believe that the dealer has concealed, omitted or failed to disclose wilfully the particulars of such turnover or has furnished incorrect particulars of such turnover and thereby returned figures below the real amount;
(b) within (eight) years (from the date of the order of the assessment or reassessment) in any other case:
serve on the dealer a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 17 and proceed to assess or reassess the amount of tax due from the dealer in respect of such turnover, and the provisions of this part shall, so far as may be, apply accordingly as if the notice under this sub-section was a notice under Sub-section (2) of Section 17 :
Provided that the amount of tax shall be assessed or re-assessed after allowing such deductions as were permissible during the said period and at rates at which it would have been assessed had the turnover not escaped assessment or full assessment, as the case may be."
It is a settled proposition of law that before a competent authority initiates action u/s 19 of the Act, either on the basis of information received, or otherwise that reasonable grounds exist to act in terms thereof, he has to record his satisfaction. Unless this satisfaction is recorded, initiating proceedings u/s 19 of the Act is void ab initio. Not only that, there is further additional requirement to be observed with respect to the contents of the notice to be issued u/s 19 of the Act. The Section requires that a notice issued under the same should contain all or any of the requirements which may be included in a notice to be issued under Sub-section (2) of Section 17.
Admittedly, a fare look at the impugned notice clearly suggests that even this requirement has not been complied with. Viewed from any angle, therefore, the impugned notice did not conform with the requirements of law as were mandatorily to be complied with and on that ground, therefore, we have no hesitation in coming to the conclusion that the impugned notice suffered from a serious lack of jurisdiction and could not be acted upon to the prejudice of the petitioner.
3. On the aforesaid being pointed out, Mr. Poddar, learned Additional Advocate General for the respondents has very fairly stated before us that apparently, the impugned notice not being in conformity with Section 19 of the Act should be permitted to be revoked/rescinded by the respondents and that we should also permit the respondents, if so advised, to proceed afresh in accordance with law.
4. Based on our observation herein-above and because of the aforesaid statement of Mr. Poddar, this petition is allowed. The impugned notice dated 5.5.2001 and the consequential communication dated 31.7.2001 and the proceedings arising therefrom are quashed and set aside. However, it is open to the respondents, if so advised, to proceed afresh in accordance with law and in the even they do so, the petitioner shall be at liberty to contest the proceedings in all respects and if felt aggrieved in any manner, to approach this court again.
The petition is allowed. No order as to costs.
