Deemed assessment and recorded reasons to believe: reassessment fails without objective material showing turnover escaped assessment.

Where the statutory scheme treats a filed annual return as a deemed assessment, the premise of a case of no assessment fails once the return is filed and regular assessment is not made within limitation. Reassessment can then be initiated only on objective material and recorded reasons to believe that turnover escaped assessment; a mechanical assumption that all turnover escaped because no regular assessment survived is insufficient. The analysis also notes that an earlier writ order quashing the regular assessment for the relevant year did not preserve a valid basis for fresh reassessment. On that reasoning, the reassessment and reopening permission were treated as invalid for want of jurisdiction.

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Issues: (i) whether the annual return filed by the assessee gave rise to a deemed assessment under the statutory scheme, so as to negate the premise of a case of no assessment; (ii) whether reassessment proceedings could validly be initiated in the absence of objective material and recorded reasons to believe that turnover had escaped assessment; and (iii) whether the earlier order quashing the regular assessment for the relevant year barred the impugned reassessment.

Issue (i): whether the annual return filed by the assessee gave rise to a deemed assessment under the statutory scheme, so as to negate the premise of a case of no assessment

Analysis: The statutory scheme created a deeming fiction whereby the annual return itself operated as an assessment order, and the disclosed facts and figures formed part of that deemed assessment. Once the assessee had filed the annual return within the prescribed time, and no fresh regular assessment was made within the permissible period, the doctrine of deemed assessment revived and became absolute on expiry of the limitation for regular assessment. The premise that there was no assessment at all was therefore contrary to the statutory framework.

Conclusion: The existence of a deemed assessment was affirmed, and the contention that the assessee had suffered a case of no assessment was rejected.

Issue (ii): whether reassessment proceedings could validly be initiated in the absence of objective material and recorded reasons to believe that turnover had escaped assessment

Analysis: Reassessment could be assumed only on the basis of objective material giving rise to a genuine reason to believe that turnover had escaped assessment, and such belief had to be recorded by the assessing authority. The record disclosed no material suggesting falsity, suppression, excess claim, incomplete return, or under-assessment. The assessing authority proceeded only on the assumption that because no regular assessment subsisted, the entire turnover had escaped assessment. That approach was held to be perverse. The higher authority's permission was also treated as a mechanical exercise because it was not founded on recorded reasons or relevant material.

Conclusion: The jurisdictional basis for reassessment was absent, and the reassessment proceedings were held to be without jurisdiction.

Issue (iii): whether the earlier order quashing the regular assessment for the relevant year barred the impugned reassessment

Analysis: The earlier writ order had specifically quashed the regular assessment for the relevant assessment year, while liberty was granted only in relation to the separate assessment year dealt with in the same judgment. The later attempt to rely on that order as if it had left room for a fresh proceeding for the relevant year was inconsistent with its clear terms. However, the decisive ground in the present matter remained the absence of jurisdictional facts and recorded reasons to believe.

Conclusion: The earlier order did not save the impugned reassessment, and the challenge to the reassessment succeeded in any event.

Final Conclusion: The reassessment proceedings were annulled for want of jurisdiction, the permission granted for reopening was also invalid, and the assessee succeeded in the writ petition.

Ratio Decidendi: Where the statute deems the filed annual return to be an assessment, reassessment can be initiated only on the basis of objective material and recorded reasons to believe that turnover escaped assessment; absent such material and reasons, the proceedings are a nullity.

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