Reason to believe for reassessment requires existing material, not suspicion or unsupported departmental opinion, before reopening

Reopening under section 21 of the U.P. Sales Tax Act was held to require existing relevant material enabling an honest and reasonable belief that turnover had escaped assessment. The court stated that such belief cannot rest on mere suspicion, rumour, or an unsupported oral opinion from another department, and that subsequent assessment material cannot cure an earlier lack of jurisdictional basis. On the facts described, there was no definite material before the notices were issued, so the reopening notices were treated as without jurisdiction and were quashed.

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Issues: Whether notices issued under section 21 of the U.P. Sales Tax Act were valid when the assessing authority acted only on an oral communication or opinion from the income-tax department and not on material giving a reasonable basis to believe that turnover had escaped assessment.

Analysis: The condition precedent for reopening under section 21 is the existence of material on which the assessing authority can form an honest and reasonable belief that turnover has escaped assessment. The belief must rest on relevant facts or evidence and cannot be founded on mere suspicion, rumour, or the unsupported opinion of another department. The record showed no definite finding by the income-tax department before issuance of the notices, and the subsequent assessment material could not justify the earlier action. The principle that reopening cannot be initiated without relevant material was applied consistently with the authorities discussed on the meaning of "reason to believe".

Conclusion: The notices were without jurisdiction and were rightly quashed.

Final Conclusion: The writ petition succeeded, and the impugned reopening notices were set aside.

Ratio Decidendi: Reassessment or reopening under a statutory provision requiring "reason to believe" is valid only when the authority has relevant and existing material, not mere suspicion or unverified opinion, to support the formation of that belief.

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