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2017 (5) TMI 928 - ALLAHABAD HIGH COURT

2017 (5) TMI 928 - ALLAHABAD HIGH COURT - TMI - Validity of reassessment proceedings - change of opinion - material relied upon both for assessment and reassessment had remained the same, and therefore, subsequent view taken in reassessment proceedings was nothing but change of opinion, and was thus not permissible - Held that: - the material forming the basis for assessment and also for reassessment are one and the same. It is further apparent that on the basis of such materials, the assessing .....

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and is maintained - revision rejected - decided against Revenue. - Sales/Trade Tax Revision No. 171 of 2017 - Dated:- 17-5-2017 - Hon'ble Ashwani Kumar Mishra, J. For the Applicant : S. C. For the Opposite Party : Vishal Agarwal ORDER 1. This revision is by the State challenging an order passed by the Tribunal dated 7th October, 2010, whereby the order passed in reassessment proceedings is set aside on the ground that 'change of opinion' could not have formed the basis for a valid re .....

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er tax was in fact payable. 2. Since appropriate reply was not furnished pursuant to notice, an order of reassessment was passed imposing liability upon the assessee. An appeal preferred by the assessee failed. However, its contention was allowed in second appeal by the Tribunal on the ground that material relied upon both for assessment and reassessment had remained the same, and therefore, subsequent view taken in reassessment proceedings was nothing but change of opinion, and was thus not per .....

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r, from any assessment year or part thereof, had escaped assessment to tax or has 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 has 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 re-assess the dealer to tax according to law: Provided that the tax shall be discharged at the rat .....

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ana Kala Kendra Vs. The Sales Tax Officer Circle-20, Kanpur, reported in 1989 ATJ 301. Para 17 of the judgment is relied upon, which is extracted for the sake of convenience:- "17. We are not impressed by the argument that the instant case is a case of change of opinion. The change of opinion necessarily postulates that the assessing authority had an occasion to consider the material earlier, and on the same set of facts another opinion was sought to be formed. The question of change of opi .....

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of us after reviewing a large number of decided cases, both by this Court and by the Supreme Court, in Commissioner of Sales Tax, U. P. v. Madhu Chemical Works, Bareilly, 1988 UPTC 203: 1988 ATJ 579. It was held that in a case where a particular point has been considered on merits, and a view is taken, it would not be a case of inadvertent mistake or omission, if it is found that the view taken earlier was wrong. It would be a case of change of opinion, but if it is not so, then it would be a ca .....

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ed as 'change of opinion' in the matter. 5. Sri Mudit Agarwal and Sri Vishal Agarwal appearing for the assessee have placed reliance upon a Division Bench judgment of this Court in M/s Aryaverth Chawal Udyog & Others Vs. State of U.P. & others, reported in 2008 NTN (Vol. 37) 231, decision of this Court in Commissioner, Commercial Tax Vs. Sangam Aromatics, reported in 2012 (49) NTN DX 145, and decision of this Court in Writ Tax No.459 of 2016 (M/s Sterling India Vs. State of U.P. .....

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varied, as it would merely constitute a change of opinion. Learned counsel with reference to para 31 of the judgment of Apex Court in State of U.P. Vs. Aryaverth Chawl Udyoug (supra) submits that discovery of an inadvertent mistake or non-application of mind would also constitute change of opinion only and would not validate an order of reassessment under Section 21. 6. It is not in dispute in the facts of the present case that the material forming the basis for assessment and also for reassessm .....

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re reproduced:- "29. This court has consistently held that such material on which the assessing authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing authority in pursuance of such belief. In case of absence of such material, this court in clear terms has held the action taken by assessing authority on such "reason to believe" as arbitrary and bad in law. In case of .....

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an honest and prudent person who would act on reasonable grounds and come to a cogent conclusion. The necessary sequitur is that a mere change of opinion while perusing the same material cannot be a "reason to believe" that a case of escaped assessment exists requiring assessment proceedings to be reopened. (See: Binani Industries Limited, Kerala v. Assistant Commissioner of Commercial Taxes, VI Circle, Bangalore [2007] 15 SCC 435 and A. L. A. Firm v. Commissioner of Income-tax [1991] .....

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eason to believe cannot be said to be the subjective satisfaction of the assessing authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. 31. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the "change of opinion' and the material present before the assessing Authority. Discovery of an inadvertent m .....

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ame, a different view taken during the course of reassessment would be impermissible. Following observations from the judgment of the Division Bench is apt for present purposes, and is reproduced:- "While this Court has consistently held that the simple change of opinion cannot be a ground to initiate re-assessment proceeding, in a recent decision of the Supreme Court in the case of State of U.P. and others Vs. M/s Aryaverth Chawl Udyoug and others (2016) 91 VST 1 (SC) the Supreme Court in .....

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