TMI Blog2015 (8) TMI 1185X X X X Extracts X X X X X X X X Extracts X X X X ..... verse and against figures shown in assessment order and/or balance sheet Balance sheet indicates that out of total brass scrap, finished goods have been produced and that there was only melting loss of approximately 4% that is to say, there was production of 96% Standards indicated in confidential report of SIB authorities that there should be production figure of 94% Very basis for making ground for reassessment and for having reason to believe that some turnover had escaped assessment is lacking Consequently, impugned notice quashed Decided in favour of petitioner. - Civil Misc. Writ Petition (Tax) No. 539 of 2007, Civil Misc. Writ Petition (Tax) No. 391 of 2008 - - - Dated:- 26-8-2015 - Hon'ble Tarun Agarwala And Hon'ble Surya Prakash Kesarwani, JJ. ORDER (Per: Tarun Agarwala, J.) Since the controversy involved in both the writ petitions are same, the same is being decided together. For facility, the facts of Writ Tax No.539 of 2007 is being taken into consideration. The petitioner is engaged in the business of purchase and sale of non-pheros metals and is also engaged in the business of manufacturing brass ingots. For the aforesaid purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the respondents was per se illegal and was liable to be quashed. The learned counsel contended that reassessment proceedings is based on a confidential note issued by the SIB authorities indicating that as per norms production of the finished product should be 94% which norms is not supported by any documentary evidence and merely on such hearsay, assessment proceedings could not be opened. The learned counsel, in the alternative submitted that, in any case, the production of brass ingots and brass slag was more than 94% and that the assessing authority had misread the production figures and the figures of melting loss from the books of accounts or from the audited balance sheet to come to a conclusion that the production figures were less than 94%. It was further contended that the objections of the petitioner was not considered wherein the petitioner had explained that the production depends on several factors, namely, quality of the raw material and the process of manufacturing. The petitioner contended that the brass scrap purchased was of a inferior quality, which contained several impurities and, consequently, less quantity of brass ingots were manufactured and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of this Court after considering various judgements of the Supreme Court in M/s S. K. Traders, Modi Nagar, Ghaziabad vs. Additional Commissioner, Grade-I, Trade Tax, Zone Ghaziabad and another, 2008 UPTC 392. Similar view was reiterated by another Division Bench in Anand Prakash Agarwal vs. Commissioner of Income Tax (Central) and others, Writ Petition No.1367 of 2005 and other companion cases, decided on 29.5.2014. The Division Bench after considering the case in Assistant Commissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers P. Ltd., (2007) 291 ITC 500 (SC), held that at the stage of issuance of notice the only question to be considered was whether there was relevant material on which a reasonable person could have formed the requisite belief. In M/s Rubber Chem Sadabad Gate Hathras vs. The Additional Commissioner Grade-I, Commercial Tax , Aligarh Zone, Aligarh and another, decided on 15.3.2014, in Writ Petition No.1045 of 2009, the Division Bench of this Court, after analysing various decisions of the Supreme Court, held- On a plain and simple reading of Section 21, it is crystal clear that where a dealer has been assessed to tax at lower, then, it is a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there must be some rational basis for the assessing authority to form a belief that the whole or any part of the turnover of a dealer has for any reasons escaped assessment. Such reason or reasonable ground to believe that the whole or any part of the turnover had escaped assessment must be germane to the formation of the believe regarding escaped assessment. Such reasons or grounds must have a nexus with the formation of the belief. The approach has to be practical and not pedantic. In the light of the aforesaid proposition of law and upon perusal of the reasons to believe, which is depicted in the proposal letter of the Assessing Officer. We have no hesitation in stating that the assessing authority has misdirected itself in misinterpreting the figures indicated in the assessment order and/or audit balance sheet. We are of the opinion that there was no cogent material available with the assessing authority to form a belief that some turnover of the assessee had escaped assessment warranting initiation of proceedings under Section 21 of the Act. The sole ground for forming a reason to believe is that as per settled norms production should be 94%, whereas the petitioner h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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