Reassessment notice valid where relevant material showed escaped turnover and supported a rational belief under trade tax law.

Reassessment under Section 21 of the U.P. Trade Tax Act, 1948 is valid where the assessing authority has relevant, rational and non-arbitrary material creating a belief that turnover has escaped assessment. The adequacy of that material is not examined at the notice stage, provided it has a nexus with the belief formed. Here, search and survey records showed undisclosed sales and purchases for the relevant assessment years, and the approvals and notices were based on that material. The challenge to the reassessment notices therefore failed, as the jurisdictional basis for reopening was not shown to be infirm.

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Issues: Whether the notices for reassessment and the approvals granted under Section 21 of the U.P. Trade Tax Act, 1948 were valid in the presence of material indicating undisclosed sales and purchases, and whether the initiation of reassessment was vitiated by absence of reason to believe or by a mere change of opinion.

Analysis: Reassessment under Section 21 can be initiated only when the assessing authority has relevant, rational and non-arbitrary material giving rise to a belief that turnover has escaped assessment. The material must have a nexus with the belief formed, while the adequacy or sufficiency of that material is not for judicial scrutiny at the notice stage. On the facts, the departmental authorities had documentary material from the search and survey record showing substantial undisclosed transactions for the relevant assessment years, and the approvals as well as notices were founded on that material. The challenge therefore did not disclose any infirmity in the jurisdictional basis for reassessment.

Conclusion: The reassessment notices and the corresponding approvals under Section 21 were held to be lawful, and the challenge failed.

Ratio Decidendi: Reassessment is valid where the authority has relevant material creating a rational belief of escaped assessment, and the existence of such material, not its sufficiency, is the touchstone for jurisdiction.

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