TMI Blog1981 (3) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) of the Rules framed under the Act the entire account books etc. were produced by the petitioner before the Sales Tax Officer who verified their correctness. The books of account contained details of perfumery purchased in India and imported from outside the country. 2. It appears that the Assessing Authority received a letter dated 21st March, 1974 from the Sales Tax Officer (S. I. B.) Kanpur, giving information regarding import of perfumes by the petitioner on the basis of import licence granted to it and it was requested that the information be verified from the record of the petitioner. On the basis of the aforesaid letter the Assessing Authority issued a notice to the petitioner under Section '21' of the Act for Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any part of turnover has escaped assessment to tax for any year, the assessing authority may, after such enquiry as may be necessary, assess or reassess him to tax. 5. This provision empowers the Assessing Authority to assess or reassess a dealer if he has reason to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment. Dealing with the key words in the provision reason to believe the Supreme Court in The Commissioner of Sales Tax v. M/s. Bhagwan Industries (P) Ltd., (1973) 31 STC 293) observed thus : - In our opinion, these words convey that there must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Income Tax Act, 1922. As observed by the Supreme Court in Johri Lal v. Commissioner of Income Tax, (1973) 88 ITR 439. The formation of the required belief 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. The belief must be held in good faith. It cannot be arbitrary or capricious but based on, or justified by facts. It would not be sufficient that the Assessing Authority should have reason to suspect that the turnover has escaped assessment. 6. As noted earlier notice under Section 21 was issued to the assessee on the basis of information received from the Sales Tax Officer, (S. I. B.), Kanpur, in his letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor a copy of the letter of the Sales Tax Officer (S. I. B.) Kanpur, dated 21st March, 1974. The extract of the order-sheet of 25th March, 1974, refers to the same licence number of the same date which was the subject matter of the proceedings under section 21 or the assessment year 1969-70. The assessment order under Section 21 dated 19th March, 1976 belies the assertion made in the aforesaid order that the letter of the Sales Tax Officer (S. I. B.) Kanpur, related to year 1969-70 and 1970-71. It is further mentioned in the aforesaid order that the purchase of perfumery is noted in the account books. It is thus obvious that except for the letter of the Sales Tax Officer, (S. I. B.) there was no other material or basis for initiating procee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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