Reassessment notice requirements: absent bona fide material and recorded reasons, trade tax notices could not be sustained.

Section 21 of the U.P. Trade Tax Act, 1948 could be used only on relevant material creating a bona fide belief that turnover had escaped assessment, not on a fishing inquiry. The court found that menthol oil purchases were supported by invoices, Form IIIC(2), account entries and bank statements, and had already been verified in the original assessment, so reassessment against the purchaser could not rest merely on the selling dealer's nondisclosure. The packing material notice also lacked foundation because the form relied on was issued after the relevant assessment year. As no reasons showed proper application of mind, the notices were quashed.

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Issues: Whether notices issued under section 21 of the U.P. Trade Tax Act, 1948 could be sustained when the material relied upon did not furnish a valid basis to believe that turnover had escaped assessment and when the assessment record already contained verification of the transactions.

Analysis: Section 21 can be invoked only where the assessing authority has relevant material giving rise to a bona fide belief that turnover has escaped assessment. Such belief cannot rest on a mere inquiry or a fishing and roving exercise. The record showed that the menthol oil purchases were supported by invoices, form IIIC(2), account entries and bank statements, and had already been verified during the original assessment. The selling dealer's failure to disclose the transaction could not, by itself, justify reassessment against the purchaser. As to the packing material transaction, the form in question had been issued later than the assessment year to which the notice related, so the alleged escapement had no proper foundation. The authority had also not recorded reasons showing application of mind before initiating action.

Conclusion: The notices under section 21 were unsustainable and were quashed. The writ petition was allowed.

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