2016 (8) TMI 1374 - HC - VAT and Sales Tax

Reassessment of tax - Section 21 of U.P. Trade Tax Act, 1948 - Change of Opinion - assessment challenged on the ground that assessment was already finalized by Assessing Officer on 24.03.1999 - Held that - Learned Standing Counsel did not dispute that re-assessment proceedings have been initiated only on the basis of subsequent judgment and not otherwise. That be so, it is nothing but a case of change of opinion which does not allow jurisdiction to initiate reassessment proceedings under Section 21 of Act, 1948. Petition allowed.

Summary

Issues:
Challenge to re-assessment under Section 21 of U.P. Trade Tax Act, 1948 for Assessment Year 1996-97 based on finalization of assessment by Assessing Officer in 1999. Allegation of change of opinion by respondents leading to illegal re-assessment proceedings.

Analysis:
The judgment delivered by the High Court of Allahabad pertained to the challenge against re-assessment under Section 21 of the U.P. Trade Tax Act, 1948 for the Assessment Year 1996-97. The petitioner contended that the assessment had already been finalized by the Assessing Officer in 1999, thus questioning the validity of the re-assessment order dated 24.06.2002 and the notice issued on 20.08.2002. The respondents, while not alleging any concealment of facts by the petitioner, justified the re-assessment based on a subsequent judgment of the Court regarding concessions or exemptions granted to the petitioner. The petitioner argued that such re-assessment on the grounds of a change of opinion, rather than escape assessment, was illegal and beyond the jurisdiction of Section 21 of the Act, 1948.

The Court deliberated on the nature of the re-assessment proceedings initiated by the respondents solely on the basis of a subsequent judgment, acknowledging that it amounted to a mere change of opinion. The Court emphasized that re-assessment under Section 21 is permissible only in cases of escape assessment and not due to a change of opinion, whether initiated suo motu or based on a court judgment. Consequently, the Court concluded that the re-assessment proceedings in question were unjustified and lacked jurisdiction as they were solely based on a change of opinion rather than a case of escape assessment.

In light of the above analysis, the High Court allowed the writ petition, thereby quashing the impugned order dated 24.06.2002 proposing re-assessment and the notice dated 20.08.2002. The judgment underscored the principle that re-assessment under Section 21 should be based on grounds of escape assessment rather than a mere change of opinion, reaffirming the limitations on invoking Section 21 of the Act, 1948 for re-assessment purposes.