Reason to believe for reassessment upheld where search material gave an objective basis to reopen escaped turnover assessment.

Reassessment under Section 21 of the U.P. Trade Tax Act, 1948 is valid where the assessing authority has relevant material creating an objective and rational basis to believe turnover has escaped assessment. The expression "reason to believe" requires a nexus between the material and the belief, but the sanction order need not record elaborate reasons if it shows application of mind. On the facts, search material indicating substantial transactions with the assessee provided sufficient basis for reopening, and the assessee's objections to exemption-based tax liability were matters for assessment, not jurisdiction. The HC held the reassessment notices valid and found no ground for interference under Article 226.

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Issues: Whether the reopening of assessment and issuance of reassessment notices under Section 21 of the U.P. Trade Tax Act, 1948 were valid on the basis of a reason to believe that turnover had escaped assessment.

Analysis: Section 21 permits reassessment only where the assessing authority has an objective basis to believe that turnover has escaped assessment, been under-assessed, or assessed at a lower rate. The expression "reason to believe" requires relevant material and a nexus between the material and the formation of belief. Permission for reopening may be granted even where it involves a change of opinion, and the sanction order need not record elaborate reasons so long as it shows application of mind. Here, the authority relied on search material indicating substantial transactions with the petitioner for the relevant year, which provided a tangible basis for the belief that income had escaped assessment. The petitioner's challenge to the ultimate tax liability under the exemption scheme raised substantive matters for assessment and did not negate jurisdiction at the stage of reopening.

Conclusion: The reopening satisfied the statutory requirement of reason to believe and the notices were held to be valid, against the petitioner.

Final Conclusion: No interference under Article 226 was warranted and the writ petition failed.

Ratio Decidendi: Reassessment is valid where the authority has relevant material forming an objective and rational basis for a belief of escaped assessment, even if the sanction involves a change of opinion and the detailed merits of liability remain for assessment proceedings.

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