Reopening assessment approval requires application of mind to reasons and reply; mechanical sanction is unsustainable.
Approval for reopening assessment under the proviso to section 21(2) of the U.P. Trade Tax Act must show real application of mind to the recorded reasons and the assessee's reply; a mechanical sanction is unsustainable and liable to be set aside. The supervisory authority need not decide the merits in detail, but it must consider the material placed before it before granting approval. After remand, limitation does not operate exactly as in an original initiation, though the authority must still act within a reasonable time and according to law. On the facts described, the limitation objection was not decisive, but the sanction failed for lack of proper consideration.
Issues: (i) Whether the approval granted for reopening assessment under the proviso to section 21(2) of the U.P. Trade Tax Act, 1948 was vitiated for want of application of mind and for non-consideration of the assessee's reply; (ii) Whether the action taken after remand was barred by limitation.
Issue (i): Whether the approval granted for reopening assessment under the proviso to section 21(2) of the U.P. Trade Tax Act, 1948 was vitiated for want of application of mind and for non-consideration of the assessee's reply.
Analysis: The proviso to section 21(2) confers a supervisory power to test whether the recorded reasons justify authorisation for reopening beyond limitation. The authority is not required to adjudicate the merits in detail, but it must apply its mind to the recorded reasons and the assessee's submissions before granting approval. The impugned orders did not show consideration of the reply and were passed mechanically, notwithstanding an earlier judicial finding that similar orders suffered from the same defect.
Conclusion: The approval orders were invalid and were rightly set aside.
Issue (ii): Whether the action taken after remand was barred by limitation.
Analysis: Where proceedings are set aside in writ jurisdiction and fresh consideration is directed, the period of limitation does not operate in the same manner as in an original initiation of proceedings. Even so, the authority must act within a reasonable time and in accordance with law. On the facts, the Court did not accept limitation as a bar to the fresh exercise, but found the manner of exercise unlawful for lack of proper application of mind.
Conclusion: The limitation objection did not defeat the proceedings, though the impugned sanction could not survive for want of proper consideration.
Final Conclusion: The writ petition succeeded, the reopening approvals were quashed, costs were imposed, and the matter was sent back for fresh decision in accordance with law.
Ratio Decidendi: An approval for reopening assessment under a supervisory sanction provision must reflect application of mind to the recorded reasons and the assessee's reply; a mechanical approval without such consideration is unsustainable.
TaxTMI 
AI Drafter ✕
TaxTMI 
