Reopening of assessment on search-based excess stock information upheld where material supported a bona fide belief of escaped turnover.

Permission to reopen assessment under the proviso to Section 21(2) of the U.P. Trade Tax Act was upheld because the assessing authority had relevant material supporting a bona fide belief that turnover had escaped assessment. The court noted that, at the stage of initiation, the sufficiency of material is not for detailed judicial review, but the material must have a rational connection with the belief and not rest on mere suspicion. Search findings of excess finished goods and raw material not recorded in the books provided prima facie basis for reopening, and the dealer could explain the discrepancy in reassessment proceedings.

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Issues: Whether the permission granted under the proviso to Section 21(2) of the U.P. Trade Tax Act, 1948 for reopening the assessment was valid where the reopening was based on information about excess stock found in search proceedings.

Analysis: For reopening under Section 21, the assessing authority must have relevant material giving rise to a bona fide belief that turnover has escaped assessment. The sufficiency of the material is not for judicial review at the stage of initiation, but the material must have a rational connection with the formation of belief and cannot be extraneous or based on mere suspicion. Here, the search by Central Excise authorities disclosed excess finished goods and raw material not reflected in the books. That material was relevant to the question of escaped turnover and was enough to justify a prima facie belief at the stage of granting permission. The petitioner would have the opportunity to explain the discrepancy during reassessment proceedings.

Conclusion: The permission to reopen the assessment was valid and was not liable to interference.

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