Reassessment burden in trade tax cases stays on the department when reopening rests on a rejected factual premise.

Reassessment under Section 21 of the U.P. Trade Tax Act could not be sustained where it rested solely on a seller's denial that had already been rejected by the department in the seller's own assessment. The High Court noted that the department had treated the seller liable on the very goods in question, so the factual foundation for reopening the purchaser's assessment had collapsed. In reassessment proceedings, the burden remained on the department to establish escapement of tax on a valid evidentiary basis, and that burden could not be shifted to the assessee. The Tribunal erred in relying on the rejected statement and in placing the burden on the assessee; the reassessment order was set aside.

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Issues: Whether reassessment under Section 21 of the U.P. Trade Tax Act could be sustained on the basis of the seller's denial when the department itself had disbelieved that denial in the seller's own assessment, and whether the burden to prove escapement of tax could be shifted to the assessee.

Analysis: The reassessment was founded solely on the statement of the seller that it had not sold bricks after 30.09.2002. However, the record of the seller's own assessment showed that the same stand had been rejected by the department, and the seller had been held liable to tax on the very bricks available with it. In these circumstances, the premise used to reopen the assessee's assessment lost its foundation. The burden in reassessment proceedings remained on the department to establish that the original disclosure was and that tax had escaped assessment, and that burden was not discharged. The Tribunal erred in shifting that burden to the assessee and in relying on a statement already rejected in the seller's assessment.

Conclusion: Reassessment could not be sustained, and the reassessment order was liable to be set aside. The issue was answered in favour of the assessee.

Ratio Decidendi: In reassessment proceedings, the department must establish escapement of tax on a valid evidentiary basis, and it cannot rely on a factual premise that it has already rejected in another assessment to shift the burden onto the assessee.

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