TaxTMI 
TaxTMI 
2014 (5) TMI 414
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.... order dated 4th February, 2010 whereby the accounts book were also accepted. The assessment is being reopened in exercise of power conferred under Section 21 of the Act on the basis that Trade Tax Department has received information from the Deputy Accountant General, U.P. informing that during search operation carried by the officers of Central Excise Department, on 27th July, 2007 at the business premises of the petitioner excess stock of finished goods worth Rs. 3.60 Crore was detected. It was not found recorded in the accounts book of the petitioner-Company. It was also not disclosed in the closing stock and as such there is escapement of tax of Rs. 31.67 Lakh at the hands of the petitioner. The Assessing Officer of the petitioner under the U.P. Trade Tax Act sought permission from Additional Commissioner-I, Commercial Tax to reopen the assessment of the petitioner under Section 21(2) of the Act. After issuing a show cause notice, the Additional Commissioner-I, Commercial Tax in exercise of power conferred on it under the proviso to Section 21(2) of the Act by the impugned order dated 29th February, 2012 has granted permission to the Assessing Officer to reopen the assessmen....
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.... proceedings is in the nature of administrative order and no interference under Article 226 of the Constitution is called for. Considered the respective submissions of the learned counsel for the parties. On 23rd July, 2007, a team of Central Preventive Officers of Central Excise Commissionerate, Lucknow, visited the factory premises of the petitioner and a discrepancy was noticed that the petitioner has got much more finished goods as well as raw-materials vis-à-vis the stock position as recorded in the accounts book. A show cause notice was issued by the Central Excise Authorities requiring the petitioner to show as to why 9.825 M.T. of Lead Oxide Grey (finished goods) may not be confiscated. Also raw-materials 2.490 M.T. of Lead Ingot was sought to be confiscated. The confiscation order was passed and redemption fine was imposed. The matter was carried in appeal and was remanded back for fresh consideration by the statutory authority. On remand, Deputy Commissioner, Central Excise Division, Raebareli vide order dated 21st April, 2009 held that "Thus, both the quantities i.e. 9.825 MT of finished goods and 2.490 MT of raw material i.e. lead ingots were out of the account....
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....ounds necessarily postulate that they must be germane to the formation of the belief regarding escaped assessment. If the grounds are of an extraneous character, the same would not warrant initiation of proceedings under the above section. If, however, the grounds are relevant and have a nexus with the formation of belief regarding escaped assessment, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the grounds are adequate or not is not a matter which would be gone into by the High Court or this Court, for the sufficiency of the grounds which induced the assessing authority to act is not a justiciable issue. What can be challenged is the existence of the belief but not the sufficiency of reasons for the belief. At the same time, it is necessary to observe that the belief must be held in good faith and should not be a mere pretence.".. Then, reliance was placed on para-11 of the judgment of the Apex Court in the case of The Income-Tax Officer, I Ward, District VI, Calcutta and others versus Lakhmani Mewal Das (1976) 3 SCC 757. The said paragraph is reproduced below: "As stated earlier, the reasons for the formation of the belief....
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....sment. In Joti Parshad vs. State of Haryana J.T. 1992 (6) S.C., 94 the Hon'ble Supreme Court while dealing with the meaning of expression 'reason to believe' in section 26 of the Indian Penal Code held that the reason to believe is not the same as suspicion and a person must have reason to believe if the circumstances are such that a reasonable man would, by probable reasoning conclude or infer regarding the nature of the thing concerned. In Income Tax Officer vs. Lakhmani Mewal Das (1976) 103 I.T.R. 437 the Hon'ble Supreme Court held that the reasons for the formation of the belief contemplated by section 147 (a) of the Income Tax Act, 1961, for the reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of this belief. The Hon'ble Supreme Court further observed that though it is true that the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax Officer on the point as to wheth....
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....r has not been totally exonerated nor there is any such case in the writ petition. In a search operation, excess stocks of raw-materials and finished goods were physically found. The excess stocks either have been sold or where it has been gone has to be explained by the petitioner as it has not been accounted in the closing stock, a fact which cannot be possibly be disputed, at this stage at least. Where and in what manner, the excess stock has been dealt with by the petitioner and where it has gone, remains unexplained. The petitioner will have an opportunity during reassessment proceedings to explain his stand but at this stage of the proceedings granting permission, it cannot be said that the information of excess stock in respect of finished and unfinished goods is not germane to form the belief that the turnover of the assessee has escaped assessment. The other limb of the argument of the petitioner's learned counsel is that the information may be there but it is for the Assessing Authority to form a belief which according to him is lacking in the present case that the turnover has escaped assessment. A distinction between reason to suspect and reason to believe was put ....
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....& Co. Versus The Sales Tax Officer, Sector 17, Kanpur 1981 U.P.T.C. 396 and The General Electric Company of India Ltd. Versus The Sales Tax Officer, Sector IV, Kanpur (1974) 33 S.T.C. 108. These decisions were rendered after passing of the reassessment order and it was found that on the facts of those cases that the information on the basis of which notice was issued to the dealer was not sufficient to form the belief that the turnover has escaped assessment. These cases were decided on their own facts and the ratio laid down therein does not in any manner is otherwise which we are taking in the present case. The test in such matters is whether a person properly instructed on the facts and law could reasonably entertain the belief that the turnover has escaped assessment or not. A feeble attempt was made by the petitioner to show that the notice for reassessment by the Assessing Officer was issued even prior to passing of the order granting permission by pointing out that in the said show cause notice the dispatch number is given as 623/28th February, 2012 meaning thereby it was dispatched on 28th February, 2012. The said argument is not at all attractive as notice was signed by t....