AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 1185
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....is also engaged in the business of manufacturing brass ingots. For the aforesaid purpose of manufacturing brass ingots, the petitioner was importing brass scraps after paying customs duty for the assessment year 2000-01 under U.P. Trade Tax Act. The books of accounts were duly audited and produced before the assessing authority wherein the sales and purchases were checked, vouched and verified and the books of accounts as well as the production and sales of brass ingots and brass slag were accepted. Thereafter, the Assessing Officer, namely, the Assistant Commissioner (Assessment), Trade Tax sent a proposal to the Additional Commissioner under the proviso to Section 21(2) of the U.P. Trade Tax Act seeking permission to make a reassessment ....
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....arned Special Counsel for the State. The learned counsel for the petitioner submitted that the foundational requirement for initiating reassessment proceedings was missing in the instant case and, therefore, the entire action on the part of the respondents was per se illegal and was liable to be quashed. The learned counsel contended that reassessment proceedings is based on a confidential note issued by the SIB authorities indicating that as per norms production of the finished product should be 94% which norms is not supported by any documentary evidence and merely on such hearsay, assessment proceedings could not be opened. The learned counsel, in the alternative submitted that, in any case, the production of brass ingots and brass slag....
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....t stated that under Section 12(2) of the Act, the assessee was required to maintain the books of accounts at every stage of production, which apparently in the instant case was not done or not examined and, therefore, it was essential for the assessing authority to examine the production registers. The learned counsel submitted that on this basis reassessment proceedings were justified. Having heard the learned counsel for the parties, the principle of law for reinitiating proceedings under Section 21 of the Act is well settled. Reassessment proceedings can be initiated only on the basis of the material on which a belief can be formed that some turnover has escaped assessment. The question, whether the assessing officer had reasons to bel....
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....as relevant material on which a reasonable person could have formed the requisite belief. In M/s Rubber Chem Sadabad Gate Hathras vs. The Additional Commissioner Grade-I, Commercial Tax , Aligarh Zone, Aligarh and another, decided on 15.3.2014, in Writ Petition No.1045 of 2009, the Division Bench of this Court, after analysing various decisions of the Supreme Court, held- "On a plain and simple reading of Section 21, it is crystal clear that where a dealer has been assessed to tax at lower, then, it is a case of escape assessment. Rider is that such Assessing Authority should have reason to believe that whole or part of turnover has escaped assessment. The condition precedent, namely, the formation of opinion on the part of Assessing Auth....
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....ent, the assessing authority would be clothed with jurisdiction to take action under the section. Whether the ground are adequate or not is not a matter which would be gone into by the High Court or the Supreme 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 or reasons for the belief. At the same time, the belief must be held in good faith and should not be a mere pretence." From a perusal of the aforesaid, it is apparently clear that the words "reason to believe" in Section 21 of the U.P. Trade Tax Act conveys that there must be some rational basis for the assessing authority to form a belief tha....
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....icates lesser production leading to believe that some turnover had escaped assessment. This belief of the assessing authority is patently perverse and against the figures shown in the assessment order and/or the balance sheet. As per the balance sheet, the total raw material purchased was 1,22,252 kgs. and the total finished goods produced was 1,17,701 kgs. Only 4550.40 kgs. was shown as melting loss. Consequently, the figures shown by the assessing authority in its proposal that there was a melting loss of 58,363 kgs. of brass scrap is erroneous and against the material evidence on the record. We are of the opinion that the assessing authority has wrongly arrived at the figure of 58,363 kgs., and has wrongly included the production of bra....