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2015 (12) TMI 180 - HC - VAT and Sales TaxValidity of reassessment proceedings - Escapement of sales turnover - Held that:- Court, after surveying the earlier cases that clarified the legal position held that the requirement of the AA having to record ‘reasons to believe’ preceding the issuance of the show cause notice to an Assessee under Section 24 (1) DSTA was mandatory. It is not enough for the AA to merely reproduce the wording of the provision and state in the notice to an Assessee that there is "reason to believe" that the whole or any part of the turnover has escaped assessment. It other words the exercise of reopening of an assessment is not a casual one. The noting has to reveal that as part of the process of reopening the assessment, the AA applied his mind to the relevant materials prior to arriving at the conclusion, even prima facie, that there are 'reasons to believe' that the whole or any part of the turnover has escaped assessment. - mandatory requirement of Section 24 (1) of the DSTA has not been fulfilled in the present case. Schedule 13 of the balance sheet produced by the Assessee clearly discloses the know-how fees in the sum of ₹ 400 lakhs. The extracted passage of the order clearly indicates that the Assessing Officer had perused the balance sheet and thereafter framed the assessment. Consequently, what in fact the AA did was to review his earlier order based on a change of opinion that the said sum of ₹ 400 lakhs ought to have been brought to tax. This course of action was legally impermissible and was beyond the scope of the powers of the AA under Section 24 (1) of the DSTA. If indeed the assessment order of the AA was prejudicial to the interests of the revenue then it was open to the Commissioner to seek to invoke the revisional powers under Section 46 of the DSTA. That course was, however, not opted in the present case. - Decided in favour of assessee.
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