Retrospective reassessment limitation and valid reason to believe sustained where escaped assessment was supported by material, not mere opinion change.

Amended limitation for reassessment under section 21(2) of the U.P. Trade Tax Act, 1948 was treated as retrospective because the statutory language was explicit and was applied to pending and earlier assessments within the enlarged period. The reassessment notice was also sustained because it rested on relevant material showing discrepancy in exemption claimed against the certificates relied upon, creating a rational basis to believe that income had escaped assessment. The Court distinguished a mere change of opinion on the same facts from reassessment founded on tangible material, and held that the proceedings were not invalid on either ground.

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Issues: (i) Whether the amended limitation under section 21(2) of the U.P. Trade Tax Act, 1948 applied retrospectively so as to validate reassessment proceedings for assessment year 1990-91. (ii) Whether the notice for reassessment was invalid as a mere change of opinion and without a valid reason to believe under section 21(1) of the U.P. Trade Tax Act, 1948.

Issue (i): Whether the amended limitation under section 21(2) of the U.P. Trade Tax Act, 1948 applied retrospectively so as to validate reassessment proceedings for assessment year 1990-91.

Analysis: The amended proviso to section 21(2) was held to be clear in language and intended to operate on pending and previously completed assessments within the enlarged period. The Court relied on the principle that where statutory language is explicit, it must be given full effect, and treated the contrary view in an earlier Division Bench decision as per incuriam because it had not noticed the binding Supreme Court authorities on retrospectivity.

Conclusion: The amended limitation applied retrospectively and the reassessment notice was not barred by time; this issue was decided in favour of Revenue.

Issue (ii): Whether the notice for reassessment was invalid as a mere change of opinion and without a valid reason to believe under section 21(1) of the U.P. Trade Tax Act, 1948.

Analysis: The notice was founded on the discrepancy between the exemption granted on the basis of 270 certificates and the actual total reflected by those certificates. The Court held that reassessment can be initiated only on relevant material and a rational nexus to escaped assessment, and that a mere change of opinion on the same facts would not suffice. On the facts, the notice was based on material showing excess exemption and not on a mere reappraisal of the earlier view.

Conclusion: The Court found a valid reason to believe and held that the proceedings were not vitiated by change of opinion; this issue was decided in favour of Revenue.

Final Conclusion: The reassessment proceedings were upheld and the writ petition was dismissed.

Ratio Decidendi: Where the statutory language governing reassessment limitation is explicit, its amended retrospective operation must be given full effect, and reassessment is valid if supported by relevant material showing escaped assessment rather than a mere change of opinion.

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