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TMI Blog1972 (7) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ved two notices dated 18th March, 1971, under section 21 of the U.P. Sales Tax Act, seeking to reopen both the assessments, and requiring the petitioner to appear before the Sales Tax Officer on 30th March, 1971, with its books of account. It was stated in the notices that the Sales Tax Officer had reason to believe that some turnover liable to tax had escaped assessment. The petitioner challenged the validity of these proceedings. He inspected the record, and found that the Sales Tax Officer had on the file recorded that from the income-tax department, it had been orally learnt that in the enquiry conducted by that department, it was found that the petitioner had in that year suppressed sales and purchases in a large measure, and so noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court". In that case, the reasons for the belief recorded by the Income-tax Officer were: "(1) The assessee who is or was at the relevant time a managing director in about a dozen limited companies along with 'Oberois' is believed to have made some secret profits which were not offered for assessment. (2) The assessee is believed to have received a sum of Rs. 22 lakhs from 'Oberois' and this sum or at least part of which represents income which has escaped assessment. " Dealing with these reasons, the Supreme Court observed: "There is no material or fact which has been stated in the reasons for starting proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs that this information was gathered from the assessment order passed subsequently. The things that the Sales Tax Officer knew prior to the issuance of the notices were, in our opinion, neither facts nor material. They were the opinion of the income-tax department. Thus, the condition precedent, upon which the Sales Tax Officer could have initiated proceedings, was not in existence. In Chhugamal Rajpal v. S.P. Chaliha and Others[1971] 79 I.T.R. 603 (S.C.)., the position was that the Income-tax Officer recorded that certain creditors of the assessee were name-lenders and the loan transactions were bogus and, therefore, a proper investigation regarding the loans was necessary. The court observed that the Income-tax Officer had not set out an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahabir Prasad Jagdish Prasad v. Commissioner of Sales Tax[1971] 27 S.T.C. 337. In that case, the Sales Tax Officer was informed by an expert that the consumption of electrical energy for the manufacture of oil by the assessee was disproportionately high. The question was whether upon its basis, the assessment could be reopened. The Bench sub-divided the question into two parts, firstly, whether the proceedings could validly be initiated under section 21, and, secondly, whether this report constituted sufficient material for rejecting the assessee's account books. On the second question, the Bench held that this report could at best raise a strong suspicion, but suspicion, however strong it might be, could not take the place of positive mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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