Reason to believe for reassessment must rest on fresh objective material, not mere change of opinion or suspicion.

Reassessment under Section 21 of the U.P. Trade Tax Act could not be initiated after a composition assessment under Section 7-D where the record disclosed no fresh objective material showing escapement of turnover. The court held that a valid reason to believe must rest on relevant material with a live link to alleged escapement, and cannot be founded on conjecture or a mere change of opinion on the same facts. Because the reassessment notice lacked any rational basis and the earlier assessment had already examined the contracts and compounding conditions, the initiation of reassessment was without jurisdiction and the writ petition succeeded for the assessee.

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Issues: Whether reassessment proceedings under Section 21 of the U.P. Trade Tax Act, 1948 could be initiated when the earlier composition assessment had been completed under Section 7-D of the Act and the recorded material did not disclose a rational basis for believing that turnover had escaped assessment.

Analysis: The power to reopen assessment under Section 21 requires reason to believe founded on objective material having a live link with escapement of turnover. Such belief cannot rest on surmise, conjecture, or a mere change of opinion on the same set of facts. The record of the earlier composition assessment showed that the assessing authority had already examined the contracts and applied the relevant compounding conditions. The order authorising reassessment did not disclose any fresh material or objective basis to support escapement of assessment. In these circumstances, the initiation of reassessment was held to be without jurisdiction.

Conclusion: The reassessment proceedings were invalid and the writ petition was allowed in favour of the assessee.

Ratio Decidendi: Reassessment under Section 21 can be sustained only on objectively relevant material giving rise to a bona fide reason to believe that turnover has escaped assessment, and not on a mere change of opinion or unsupported suspicion.

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