Burden To Prove Escaped Assessment Lies On Assessing Authority: Allahabad High Court Quashes Reassessment Order Against Flipkart

The Allahabad High Court has quashed the reassessment order against Flipkart and held that the burden to prove escaped assessment lies on assessing authority.

The bench of Justice Saumitra Dayal Singh and Justice Shiv Shanker Prasad has observed that the burden of establishing the existence of recorded reasons was entirely on the department. Neither the petitioner was obligated to provide any material, nor was it required to assist in the formation of the reasons. Since the assessing authority wanted to assume the jurisdiction to reassess the petitioner for FY 2012–13, he took it upon himself to bring on record both the relevant material as may have led to the formation of a reason—to believe that any turnover had escaped assessment—and he further burdened himself to record the relevant reasons as to the belief of the escapement of turnover from assessment. The burden thus cast was not discharged.

The petitioner, Flipkart, assailed the proposal issued by the Additional Commissioner under Section 29(7) of the Uttar Pradesh Value Added Tax Act, 2008, as well as the consequent order granting permission to the petitioner's assessing authority to re-assess the petitioner for the A.Y. 2012–2013 (U.P. and Central), in the extended period of limitation provided under Section 29(7). The petition was entertained. The operation and effect of the order and the consequential notice were stayed.

The assessee contended that merely because a conscious assessment may not have been made by the assessing authority, it may not itself constitute a “reason to believe” that any part of the turnover had therefore escaped assessment for FY 2012–13. In the absence of any material being available at the hands of the assessing authority and/or the Additional Commissioner as may have led to the formation of a belief that any part of the turnover of the petitioner had escaped assessment, there could never arise any reason for such a belief to be entertained. In other words, it has been submitted; there is neither any relevant material nor any reason “to believe” that any part of turnover had escaped assessment at the hands of the petitioner.

The department contended that there was no error on the part of the assessing authority in making the proposal to reassess the petitioner for FY 2012–13, as no part of the turnover for that assessment year had been assessed to tax.

The court held that there was neither any relevant material nor any reason recorded by the assessing authority that any part of the turnover of the petitioner had escaped assessment. Consequently, the jurisdiction to reassess the petitioner never arose with the assessing authority for FY 2012–13.

Counsel For Petitioner: Tarun Gulati, Kunal Kishore, Nishant Mishra,Tanmay Sadh

Counsel For Respondent: C.S.C.

Case Title: M/S Flipkart India Pvt. Ltd. Versus State Of U P And 4 Others 2024 LiveLaw (AB) 116

Case citation: 2024 LiveLaw (AB) 116

Case No.: Writ Tax No. - 248 Of 2021

Click Here To Read The Order