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TMI Blog2003 (12) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... d started making the enquiry from the respective assessing authority of the seller about the genuineness of the seller party and about the sale made by them. One of the letter No. 895 dated January 18, 1984 appeared to have been written by the assessing authority to the Sales Tax Officer (Information), Kanpur, for making enquiry about sixteen dealers relating to Kanpur from whom the applicant had disclosed to have made the purchases. Sales Tax Officer (Information), Kanpur vide letter dated February 23, 1984 informed the assessing officer of the applicant that in the absence of complete address, any action from its office was not possible. He requested to send the complete address for necessary action. It is not clear whether the assessing authority had sent any reply to the Sales Tax Officer (Information), Kanpur, against letter dated February 13, 1984. However, as per the order sheet, which is filed a annexure No. CA-1 to the counter-affidavit, filed by the respondents, a notice under section 21 of the Act was issued on March 27, 1984 and the applicant was asked to appear on March 31, 1984. The said notice was served on the applicant, for which there is no dispute. Perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed. 4.. I have heard Sri. R.R. Agrawal, learned counsel for the applicant and Sri B.K. Pandey, learned Standing Counsel. 5.. Learned counsel for the applicant stated that on the date of issue of notice under section 21 of the Act, i.e., December 3, 1984 there was no material on the basis of which belief could be formed about the escaped assessment and hence, proceeding under section 21 of the Act was invalid. Learned Standing Counsel has filed counteraffidavit and in the counter-affidavit, it has been stated that in response to the letter by the officer of the assessing authority, the information was received from Trade Tax Officer, Kanpur vide letter dated the names and address as desired by the aforesaid letter, the said localities are not situated in Kanpur. Hence, it was further requested that complete name and office alongwith house number be made available so that that necessary proceedings can be taken. It has been further stated that vide letter dated September 18, 1984 assessing authority required the assessee to supply correct name and address of the Kanpur dealers. It has been further stated that vide letter dated March 25, 1985 Trade Tax Officer, Kanpur, inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi hai ! " 7.. In pursuance of this letter, assessing authority vide letter dated September 18, 1984 asked the applicant to supply the correct names and addresses of the Kanpur dealers, which appear to have been supplied by the applicant and the letter appears to have been written to Sales Tax Officer for further enquiry. Without waiting for the information from Sales Tax Officer, Kanpur, Sales Tax Officer issued notice on December 3, 1984. Perusal of the letter dated July 13, 1984 shows that for the want of proper names and addresses no enquiry was made. The information of the Sales Tax Officer that there was no locality in the name of Shiv Nagar and Brahaman Pur as far his knowledge was his tentative view, which was based on no enquiry. Therefore, up to stage of issue of notice under section 21 of the Act there was no such material on the basis of which any definite opinion could be formed that the parties from whom, applicant had made purchases were not in existence and fake. It is settled principle of law that action under section 21 of the Act cannot be taken on the whims of the assessing authority by resorting to conjectures of imagination. It is not any and every material, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment but no action was taken thereon. The character of the information being the same, it could not on the second occasion instil a reasonable belief in the Sales Tax Officer, without further inquiry, that turnover has escaped assessment." 9.. In the case of Commissioner of Sales Tax v. Tata Engineering Locomotive Co. reported in 1980 UPTC 588, a notice under section 21 of the Act was issued on March 25, 1976. Learned Standing Counsel relied upon letter dated March 27, 1976 which referred to the telephonic talks and mentions "Kuch Din Purva" which was stated to be material on the basis of which, assessment was reopened. This Court held "The question however, is whether material of this letter was available to the Sales Tax Officer, who issued notice under section 21 of the Act. There is nothing on the record or in the order sheet from which it could be gathered that the Sales Tax Officer before issuing notice had information and after applying mind came to the conclusion that the turnover of the assessee has escaped assessment". The court further held that it is settled that proceedings under section 21 of the Act could be reopened on material on record. In the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 his belief. The honourable 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 whether action should be initiated for reopening the assessment yet at the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. This view was reiterated by the honourable Supreme Court while dealing with the provisions of section 21 of the U.P. Trade Tax Act in Commissioner of Sales Tax v. Bhagwan Industries (P) Ltd. [1973] 31 STC 293 in which it was held that reasonable grounds necessarily postulate that they must be ger ..... X X X X Extracts X X X X X X X X Extracts X X X X
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