TMI Blog2014 (9) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... some part of the turnover had escaped assessment to tax. The reasons to believe must be formed on the basis of material before the issuance of the notice by the Assessing Officer, i.e. prior to 05.09.2005 indicating a belief that some part of turnover had escaped assessment. Supplying reasons subsequent to the issuance of notice by the Assessing Officer cannot validate the notice. In the light of the circular, reasons in brief should be given in the notice issued under Section 21 of the Act and that there must be reasons recorded on the file by the Assessing Officer coming to a prima facie conclusion or forming a belief that some part of turnover had escaped assessment to tax before issuance of a notice under Section 21 of the U.P. Trade Tax Act - there is no reason recorded by the Assessing Officer coming to a belief that some part of turnover had escaped assessment to tax prior to the issuance of notice under Section 21 of the Act. Consequently, the impugned notices dated 05.09.2005 issued under U.P. Trade Tax Act and Central Sales Tax Act for the assessment year 2003-04 cannot be sustained and are quashed - Decided in favour of assessee. - Writ Tax No. -1310 of 2005 - - - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had escaped assessment to tax, the impugned notices were bad in law and were liable to be quashed. On the other hand, the learned counsel for the State submitted that pursuant to the notice date 05.09.2005, a supplementary notice dated 14.09.2005 was issued indicating therein the reasons for issuance of notice under Section 21. In this notice, it was indicated that a Special Investigation Branch, Trade Tax, NOIDA had surveyed an iron steel trading firm M/s P.K. Enterprises on 19.03.2005 and seized certain form-49, which were checked by digital ultraviolet photography, in which it was found that the original name of the purchaser was omitted and the name of M/s P.K. Enterprises was written, and on this basis, an opinion was formed that certain part of the turnover of the petitioner had escaped assessment. The learned counsel submitted that it was not necessary that reasons should be recorded in the notice or on the file and that the Assessing Officer could issue a notice under Section 21 based on subjective satisfaction on the tangible material available on the file, on the basis of which a reasonable belief could be formed for issuance of a notice under Section 21 of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 21, it is crystal clear that where a dealer has been assessed to tax at lower, then, it is a case of escape assessment. Rider is that such Assessing Authority should have reason to believe that whole or part of turnover has escaped assessment. The condition precedent, namely, the formation of opinion on the part of Assessing Authority that there is reason to believe that the case in which the action is contemplated falls within the ambit of at least one of the several contingencies mentioned under Section 21. The reason to believe must have rational connection or life linked between the material coming in possession of Assessing Authority and the escapement of turnover of the assessee from assessment in a particular year. To put it differently, the Assessing Authority must form opinion objectionably on reasonable ground that the turnover has escaped assessment. In Commissioner of Sales Tax vs. Bhagwan Industries (P) Ltd. (1973)31 STC 293 (SC), it has been held as follows: The words reason to believe in s. 21 of the U.P. Sales Tax Act convey that there must be some rational basis for the assessing authority to form the believe that the whole or any part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have before him the material, which induced a reasonable belief in his mind that the turnover of the assessee either in whole or in part had escaped assessment. The satisfaction of the Sales Tax Officer as to the escapement of the turnover was not subjective but has to be based upon relevant material. In Sales Tax Officer Vs. Uttareswari Rice Mills, AIR 1972 SC 2617, the Supreme Court held that the language of Section 12(8) of the Orissa Sales Tax Act, 1947, which is similar to the provision of Section 21 of the U.P. Trade Tax Act does not expressly or by necessary implication postulates recording of reasons in the notice, which is issued to the dealer. The Supreme Court held that it is not necessary that reasons should be incorporated in the notice and that failure to do so would not invalidate the notice. The learned counsel for the State also placed reliance upon a decision in Income Tax Officer and others Vs. Biju Patnaik, AIR 1991 SC 464, wherein it was held that it is not necessary that reasons should be recorded in the notice issued under Section 147 of the Act and that it was sufficient if there was substantial material on the record to come to a conclusion that i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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