TMI Blog2010 (1) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... er S.P.Kesarwani, Standing Counsel, for the respondents JUDGMENT By means of the present writ petition, the petitioner is challenging the order passed under section 21(2) of the U. P. Trade Tax Act (hereinafter referred to as, the Act ) dated August 6, 2005, passed by the Additional Commissioner (Assessment), Grade I, Trade Tax, Agra, for the assessment year 1999-2000 and in pursuance thereof, the notice issued under section 21 of the Act dated September 15, 2005 issued by the Deputy Commissioner (Assessment) III, Trade Tax, Agra, annexure 6 to the writ petition. The petitioner is a registered dealer and was carrying on the business of liquid glucose, etc. During the course of the assessment proceedings for the assessment year 1999-2000, the petitioner had admitted the tax liability on the liquid glucose at 7.5 per cent for the period April 1, 1999 to January 16, 2000 and at eight per cent for the period January 17, 2000 to March 31, 2000, which is applicable to the. food product. The assessing authority while passing the assessment order on August 20, 2001 levied the tax at 7.5 per cent on the turnover of ₹ 41,76,447 for the period April 1, 1999 to January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment of tax on the turnover not assessed during the year.- (1) If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer, for any assessment year of part thereof, has escaped assessment to tax of hair been under assessed or has been assessed to tax at a rate lower than that at which it is assessable under this Act, or any deductions or exemptions have been wrongly allowed in respect thereof the assessing 'authority 'may, after issuing notice to the dealer and making such' inquiry as 'it may consider necessary/assess or reassess the' dealer or tax according to law: Provided that the tax shall be charged at the rate at which it would have been charged had the turnover riot escaped assessment, or full assessment, as the case may be. Explanation I:- Nothing in, this sub-section shall be deemed to prevent the assessing authority from making an assessment or full assessment, to the best of its judgment. Explanation II:- For the purposes of this section and section 22, 'assessing authority' means the officer or authority who passes the earlier assessment order, if any, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belief by the Income-tax Officer before proceedings can be validly initiated under section 34(1) (a) is a condition precedent: The fulfilment of this condition is not a mere formality, it is mandatory, and failure to fulfil that condition would vitiate the entire proceedings. Further, the formation of the required belief is not the only requirement: The officer is further required to record his reasons for taking action under section 34(1) (a) and obtain the sanction of the Central Board or the Commissioner, as the case may be. In Income-tax Officer v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC); [1976] UPTC 809 (SC), the honourable Supreme Court held that the reasons for the formation of the belief contemplated by reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief. The honourable Supreme Court further observed that though it is true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 21 of the Act cannot be taken on the whims of the assessing officer by resorting to conjecture of imagination. He has to have before him the facts which are germane to the issue and on the basis of which a rational man can have reason to believe that the whole or any part of the turnover has escaped assessment or has been under-assessed. In Income-tax Officer v. Madnani Engineering Works Ltd. [1979] 118 ITR 1 (SC), the honourable Supreme Court while dealing with somewhat similar provision under section 147 of the Income-tax Act, 1961 held that the existence of reason to believe on the part of the ITO was a justifiable issue and it was for the court to be satisfied whether in fact the ITO had reason to believe that income had escaped assessment. In Joti Parshad v. State of Haryana [1992] 6 JT 94 (SC), the honourable Supreme Court while dealing with the meaning of expression 'reason to believe' in section 26 of the Indian Penal Code held that the reason to believe is not the same as suspicion and a person must have reason to believe if the circumstances are such that a reasonable man would, by probable reasoning conclude or infer regarding the nature of the thing conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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