TaxTMI 
TaxTMI 
2021 (2) TMI 200
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....sion has been pressed on the following question of law: "A- Whether the Tribunal erred in law in upholding the validity of initiation of reassessment proceedings, when the same was based on belief which was totally irrelevant and also amounts to change of opinion?" 4. Briefly, during the A.Y. 2007-08, the assessee was engaged in trading in computer items. Amongst others, the assessee derived sale turnover from sale of MFD value at Rs. 02,99,07,019/-. It offered the same to tax @ 4% under the U.P. Trade Tax Act, 1948 (hereinafter referred to as the 'Act'). Without making any enquiry or discussion, the Assessing Officer concluded the assessment proceeding vide order dated 17.03.2010 and assessed the assessee on MFD as per return @ 4%. 5. It is also a fact that with effect from 01.01.2008 the provisions of Uttar Pradesh Value Added Tax Act, 2008 (hereinafter referred to as the ' VAT Act') were enforced. Consequently, for the remaining part of the assessment year A.Y. 2007-08 (01.01.2008 to 31.03.2008), the assessee was assessed to tax under the provisions of VAT Act. In those proceedings also, the assessee was initially assessed to tax on MFD @ 4%. Later, it was....
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..../S. Bhagwan Industries (P) Ltd., Lucknow (1973) 3 SCC 265, it was observed as under:- "11. ............Question in the circumstances arises as to what is the import of the words ""reason to believe"", as used in the section. In our opinion, these words convey that there must be some rational basis for the assessing authority to form the belief that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for some year. If such a basis exists, the assessing authority can proceed in the manner laid down in the section. To put it differently, if there are, in fact, some reasonable grounds for the assessing authority to believe that the whole or any part of the turnover of a dealer has escaped assessment, it can take action under the section. Reasonable grounds 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 cl....
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....at Ali Khan Bahadur, (1975) 4 SCC 360 : 1975 SCC (Tax) 316] )." 10. In the facts of the present case, the submission advanced by Sri Mishra as to change of opinion cannot be accepted since the original assessment order dated 17.03.2010 is completely silent as to the reason why the assessing authority chose to tax on MFD @ 4%. No basis or other reason was recorded by the Assessing Officer to tax the commodity MFD @ 4%. In absence of any opinion being formed and expressed at that stage, no change of opinion may arise or be alleged when at a subsequent stage, the assessing authority forms any opinion. 11. At the same time, merely because no opinion had been formed by the Assessing Officer at the stage of original assessment, it would not automatically lead to the conclusion, either that any turnover had escaped assessment or that the Assessing Officer had absolute discretion to initiate reassessment proceedings as has been suggested by the learned Standing Counsel relying on a decision of the Division Bench of this Court in M/s. Kalpana Kala Kendra Vs. The Sales Tax Officer Circle-20, Kanpur 1989 ATJ 301. In that case also, the original assessment order was silent as to the enqu....
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....isted under the Act, at the relevant time and he did not refer to any law that may have been existing and he also did not advert to any material to entertain the belief that the commodity MFD was an unclassified item. Here, it may be noted that Notification No.K.A.N.I.-2-5746/XI-9(236)/96-U.P. Act-15-48-Order-(30)-2002, amended entry no. 74 in the pre-existing taxing notification issued under the Act w.e.f. 20.12.2002. The amended entry reads as below: S.No. Description of goods Point of tax Rate of tax percentage 1 2 3 4 75(i)(a) Television, video cassette recorders, video cassette player, Satellite receiver, wireless set, video cassette, video games and electronic toys; M or I 12% (b) Telephones including cordless phones with cords, cellular phones and parts, accessories and components thereof. M or I 4% (ii) Computer hardware, software and parts thereof, and electronic components that is to say all types of passive components, resisters, capacitors, diodes and other active components, transistors, integrated circuits, large scale integration, very large scale integration chips, black white picture tubes, colour picture tubes,....