1988 (12) TMI 318 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of reassessment notice u/s 21 of the U.P. Sales Tax Act, 1948.
2. Validity of the material basis for reassessment.
3. Allegation of change of opinion by the assessing authority.

Summary:

1. Jurisdiction of Reassessment Notice u/s 21:
The petitioner challenged the validity of the reassessment proceedings initiated by a notice u/s 21 of the U.P. Sales Tax Act, 1948. The petitioner sought a writ of certiorari to quash the notice and a writ of prohibition to prevent further proceedings. The court examined whether the assessing authority had "reason to believe" that part of the petitioner's turnover had escaped assessment. The court referenced the Supreme Court's interpretation in S. Narayanappa v. Commissioner of Income-tax, Bangalore, emphasizing that the belief must be held in good faith and based on relevant material.

2. Validity of the Material Basis for Reassessment:
The Revenue contended that the notice was based on three grounds: discrepancies in purchase amounts, untaxed closing stock, and information from M/s. Sanjay Box Industries indicating under-reported purchases. The court found that the original assessment order did not consider the difference in purchases. The petitioner's vague denial and lack of detailed explanation were insufficient to disprove the Revenue's case. The court held that the assessing authority had reasonable grounds to believe that turnover had escaped assessment, justifying the reassessment notice.

3. Allegation of Change of Opinion:
The petitioner argued that the reassessment was a result of a change of opinion, which is not permissible u/s 21. The court rejected this argument, stating that there was no evidence that the assessing authority had previously considered the discrepancies. The court clarified that reassessment u/s 21 is justified if there is an escapement of assessment, regardless of whether it resulted from the assessee's concealment or the assessing authority's negligence. The court distinguished this case from others cited by the petitioner, noting that the reassessment was based on new material and not a mere change of opinion.

Conclusion:
The court dismissed the writ petition, concluding that the reassessment notice was valid and based on reasonable grounds. The petitioner failed to establish a lack of jurisdiction by the assessing authority, and the court found no merit in the argument of change of opinion. The court emphasized that the remedy of a writ of prohibition is not available unless the authority is acting without jurisdiction, which was not the case here.