Reassessment initiation upheld where recorded reasons showed allegedly non-genuine Form C declarations and escaped assessment.

Reassessment under section 21 may be initiated where recorded reasons and supporting material show a prima facie belief of escaped assessment, and a writ court will ordinarily not interfere at the approval stage. On the facts noted, the authority relied on material that inter-State sales were made on Form C declarations found to be not genuine and not issued to the assessee; that was sufficient to justify initiation. The assessee's explanation raised disputed factual questions, which were for the assessing authority to examine in reassessment proceedings rather than in writ jurisdiction. The challenge to the reassessment action therefore failed.

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Issues: Whether the initiation of reassessment proceedings under section 21 was justified on the basis of material suggesting escaped assessment and whether the writ court should interfere at the stage of approval to initiate such proceedings.

Analysis: The approval to initiate proceedings was supported by recorded reasons that the assessee had effected inter-State sales on the strength of Form C declarations which were found to be not genuine and not issued to it. On such material, the authority could form a belief that income or turnover had escaped assessment. The explanation offered by the assessee involved disputed factual matters which were more appropriately to be examined by the assessing authority in reassessment proceedings, not in writ jurisdiction.

Conclusion: The initiation of proceedings under section 21 was valid and the challenge to the reassessment action failed.

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