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2014 (6) TMI 654 - HC - VAT and Sales TaxInitiation of reassessment proceeding - Benefit of compounding scheme - UPTT Act 1948 - change of opinion - assessing authority held that out of the above 21 contracts, 9 contracts were such in which the petitioner had purchased more than 5% value of the raw materials from outside the State of U.P. and held that the compounding scheme could not be applied in respect of those 9 contracts. With regard to the remaining 12 contracts the Assessing Authority held that the contract had been executed before introduction of the compounding scheme 2000-01, hence the petitioner was eligible for the benefit of the compounding scheme as prevalent in the Assessment Year 1996-97. Held that:- It is not the case of the department that the petitioner did not truly and correctly disclosed the nature of the contract work undertaken by him. It has come on record that the Deputy Commissioner (Executive), Trade Tax examined the contract awarded to the petitioner. After examination of the two contracts he accepted the application for compounding with his wide open eyes. There is not even a slightest whisper either in the impugned notice or in the counter-affidavit that the petitioner is guilty of concealing any material fact or has not truly and correctly disclosed the contract work undertaken by him. There is no allegation that the petitioner by playing fraud obtained the order dated 7th February, 1994 by which the application under Section 7-D of the petitioner was accepted. - Section 7-D opens with non-obstante clause. It gives an overriding effect over the provision in the same or the other Act mentioned in the obstante clause. The words "reason to belief" as used in Section 21 (1) of the Act, 1948 has not to be based on surmises and conjectures, rather it is to be based on objective satisfaction. There has to be nexus between the reason to belief and the materials on the record. It is true that if there are materials on the record, the Court shall not enter into the sufficiency of the materials for forming a belief, but if there is no material which is referred to for forming a belief the initiation of reassessment proceedings is arbitrary and falls beyond the Sections 21 (1) and (2) of the Act, 1948. There was no material to form a belief that that tax has escaped assessment and the proceedings initiated were not justified - writ petition allowed - Decided in favour of assessee.
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