Reassessment must exclude turnover already taxed by estimate, while an omitted statutory cross-reference does not invalidate a non-prejudicial notice.

On reassessment based on fresh specific material, turnover already brought to tax in the original best judgment assessment should be deducted where both assessments cover the same source, to avoid double taxation; the escaped turnover is therefore confined to the net amount not previously estimated. A notice under section 21 of the U.P. Sales Tax Act was not invalid merely because it omitted a reference to section 9(3) of the Central Sales Tax Act, since the assessee was not misled or prejudiced and the reopening of inter-State sales turnover remained legally sustainable. The assessee succeeded only on the quantum issue, while the validity of the notice was upheld.

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Issues: (i) whether the escaped turnover found on reassessment could be reduced by the amount already included in the original best judgment assessment; (ii) whether omission to mention section 9(3) of the Central Sales Tax Act in the notice issued under section 21 of the U.P. Sales Tax Act invalidated the notice.

Issue (i): whether the escaped turnover found on reassessment could be reduced by the amount already included in the original best judgment assessment.

Analysis: The original assessment had included an estimated addition on a best judgment basis because the books were found unreliable generally, while the reassessment proceeded on specific fresh material showing suppression of purchases of hill. Where a supplementary assessment under section 21 is founded on definite new material but overlaps with an amount already brought to tax by estimate in the original assessment, fairness requires that the earlier estimated addition be deducted to prevent the same turnover from being taxed twice. The Court treated this as a practical rule to ascertain the true escaped turnover rather than as a rigid rule of law.

Conclusion: The question was answered in the affirmative in favour of the assessee.

Issue (ii): whether omission to mention section 9(3) of the Central Sales Tax Act in the notice issued under section 21 of the U.P. Sales Tax Act invalidated the notice.

Analysis: The notice under section 21 was sufficient because the assessee was already being assessed in respect of inter-State sales and the omission to mention section 9(3) did not mislead or prejudice it. The statutory scheme permitted reopening of escaped Central sales tax turnover through section 21 of the U.P. Sales Tax Act by virtue of section 9(3) of the Central Sales Tax Act, and a defect that is merely clerical and causes no prejudice does not vitiate the proceedings. The Court also treated the point as covered by prior authority upholding similar notices in comparable circumstances.

Conclusion: The question was answered in favour of the department and against the assessee.

Final Conclusion: The reference was disposed of by partly accepting the assessee's contention on quantum of escaped turnover while upholding the validity of the reopening notice.

Ratio Decidendi: In a reassessment based on fresh specific material, any amount already included in the original best judgment estimate and attributable to the same source of turnover should be deducted to avoid double taxation, and a notice is not invalid merely because it omits a statutory cross-reference if the assessee is not misled or prejudiced.

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