Reason to believe requirement invalidates reassessment without material showing escaped turnover under trade tax law.

Reassessment under section 21(2) of the U.P. Trade Tax Act can be initiated only if the assessing authority has a rational, material-based reason to believe that turnover has escaped assessment or been under-assessed. A mere suspicion, conjecture, or change of opinion is not enough, and the belief must have a live link with relevant material on record. As no material existed before the authority to support such belief, and the notice did not disclose any independent basis for escapement, the initiation of proceedings was held invalid.

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Issues: Whether reassessment proceedings under section 21(2) of the U.P. Trade Tax Act could be initiated in the absence of material showing reason to believe that turnover had escaped assessment.

Analysis: Reopening under section 21 of the U.P. Trade Tax Act is permissible only where the assessing authority has reason to believe, based on relevant material, that turnover has escaped assessment or has been under-assessed. The belief must have a rational connection and a live link with the material on record; mere suspicion, conjecture, or a change of opinion is insufficient. The record disclosed no material before the Additional Commissioner or the assessing authority to justify the formation of such belief, and the notice itself did not record any independent basis for escapement.

Conclusion: The initiation of proceedings under section 21(2) was invalid for want of material and a legally sustainable reason to believe, and the challenge succeeded.

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