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TMI Blog2010 (2) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... r and further writ, order or direction in favour of the petitioner as this honourable court may deem fit and proper in the circumstances of the case." The brief facts giving rise to this writ petition are that the petitioner is a company duly incorporated under the Indian Companies Act, 1956 and is engaged in the manufacture and sale of automobile tyres, tubes and flaps. Its manufacturing unit is situated at Baroda in Gujarat, Cochin in Kerala and Pune in Maharashtra. The petitioner has a branch office in the State of Uttar Pradesh at Meerut, which is registered both under the U.P. Trade Tax Act, 1948 as well as under the Central Sales Tax Act, 1956. The branch office receives the goods by way of stock transfer and sells to its customers. For the assessment year 1998-99, the petitioner has been subjected to assessment vide order dated February 28, 2001. During the course of assessment proceedings, it has been disclosed that a sum of Rs. 4,28,27,644, towards the loss claim, has been deducted in the bill along with trade discount. The loss claim was under the scheme which provided that if any manufacturing defect was found during the warranty period in the tyre and then on the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. He submitted that it is not a case of goods returned. He submitted that while granting approval, no material was available on the basis of which belief could be formed that there was escaped assessment. He submitted that it is a case of mechanical exercise of powers on the part of the Additional Commissioner while granting approval and further it is a case where notice under section 21 of the Act has been issued merely on account of change of opinion on the same existing material, which was available at the time of original assessment. The learned standing counsel submitted that the material has been referred to in the order on which the Additional Commissioner has formed the opinion and, therefore, the approval has been rightly granted by the Additional Commissioner and the proceedings under section 21 of the Act have also been rightly initiated. Having heard learned counsel for the parties, we have gone through the original assessment order; the proposal sent by the assessing officer; the order passed under section 21(2) of the Act and the notice issued under section 21 of the Act. From the perusal of the assessment order, it is apparent that the assessing authority had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, is satisfied that it is just and expedient so to do authorises the assessing authority in that behalf, such assessment or reassessment may be made after the expiration of the period aforesaid but not after the expiration of eight years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion: Provided further that the assessment or reassessment for the assessment year 1987-88 may be made by March 31, 1993: Provided also that if the eligibility certificate granted under section 4A has been amended or cancelled by the Commissioner under sub-section (3) of section 4A, the order of assessment or reassessment may be made within one year from the date of receipt by the assessing authority of the copy of the order amending or cancelling the aforesaid certificate or by March 31, 1995, whichever is later: Provided also that the assessment or reassessment for the assessment year 1989-90 may be made by March 31, 1995." Section 21(1) of the U.P. Trade Tax Act contemplates assessment and reassessment as equivalent to section 147 of the Income-tax Act, 1961. Both the sections relate to the assessment of the escaped assessment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wala reported in [1971] 82 ITR 821, the apex court has held that it is well-settled that the Income-tax Officer's jurisdiction to reopen an assessment under section 34 of the Income-tax Act, 1922, depends upon the issuance of a valid notice. If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction. In the case of Johri Lal (HUF) v. Commissioner of Income-tax, U.P. reported in [1973] 88 ITR 439, the apex court has held as follows (headnote): "The formation of the required belief by the Income-tax Officer before proceedings can be validly initiated under section 34(1)(a) is a condition precedent: The fulfilment of this condition is not a mere formality, it is mandatory, and failure to fulfil that condition would vitiate the entire proceedings. Further, the formation of the required belief is not the only requirement: The officer is further required to record his reasons for taking action under section 34(1)(a) and obtain the sanction of the Central Board or the Commissioner, as the case may be." In Income-tax Officer v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC); [1976] UPTC 809 (SC), the honourable Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder article 226 of the Constitution of India can scrutinize the reasons recorded by the assessing officer for initiating the proceedings under section 147/148 of the Act. The sufficiency of the material cannot be gone into but relevancy certainly be gone into." In the case of Royal Trading Co., Saharanpur v. Trade Tax Officer, Saharanpur reported in [2000] 16 NTN 290, the Division Bench of this court while considering section 21 of the U.P. Trade Tax Act held as follows: "Therefore, action under section 21 of the Act cannot be taken on the whims of the assessing officer by resorting to conjecture of imagination. He has to have before him the facts which are germane to the issue and on the basis of which a rational man can have reason to believe that the whole or any part of the turnover has escaped assessment or has been under-assessed. In Income-tax Officer v. Madnani Engineering Works Ltd. [1979] 118 ITR 1, the honourable Supreme Court while dealing with somewhat similar provision under section 147 of the Income-tax Act, 1961 held that the existence of reason to believe on the part of the ITO was a justiciable issue and it was for the court to be satisfied whether in fact the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of material available on record. In the case of Kalpana Kala Kendra, Kanpur v. Sales Tax Officer, Circle 20, Kanpur reported in [1989] 75 STC 198 (All); [1989] UPTC 597, the Division Bench held as follows (at pages 203 and 205 of STC): "Section 21 of the Act is based upon the theory that the taxes must be paid by the assessee in correct sum and likewise it must be collected by the statutory machinery. The escapement from assessment whether it results on account of a concealment practised or fraud played by the assessee or as a result of negligence or ignorance of the assessing authority, in our opinion, is of no consequence, provided the action to reopen the assessment is otherwise justified and the assessing officer is not acting arbitrarily or in a capricious manner. The escapement of assessment contemplated under that section may be due to various reasons. The term 'turnover has escaped assessment to tax' which includes under-assessment, may as well be the result of lack of care on the part of the assessing officer or by reason of his inadvertence on his part. Section 21 does not prohibit obtaining of information from the investigation of material on the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the survey and hence notice under section 21 was issued. It was held that this would not constitute reason to believe within the meaning of section 21 of the said Act. Hence notice under section 21 was held invalid. In the case of Palco Lining Company v. Sales Tax Officer reported in [1983] 54 STC 255 (All); [1983] UPTC 1116, the assessment order recorded that the assessing authority has after elaborately considering the evidence taken the view what was being sold by the petitioner was nothing but collar lining and its turnover of sale was held exempt from the Sales Tax Act. Under a notification the assessing authority, however, issued notice under section 21 of the said Act for reassessing the same matter, hence it was held notice under section 21 to be invalid. In the case of Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan reported in [1980] 46 STC 256 (SC); AIR 1980 SC 1552, the apex court held as follows: "It does not permit reassessment of turnover which after the due consideration, had been found exigible to tax merely because the assessing authority subsequently comes to take different view of the matter." To similar effect is another decision where we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notice under section 21 of the Act has been held amounts to re-examining the same matter again and to make fresh enquiry in the same matter, which is not permissible. In the case of Ratan Industries Pvt. Ltd., Agra v. Additional Commissioner of Trade Tax, Agra reported in [2006] 148 STC 111; [2004] 24 NTN 384, the Division Bench of this court in paragraph 22 (at page 117 of 148 STC) observed that "it is a well-settled principle of law that the question which has been examined in detail in the original assessment proceeding and thereafter the assessment order has passed, then the said assessment order cannot be reopened under section 21 of the Act on a mere change of opinion". In the case of IL and FS Investment Managers Ltd. v. Income-tax Officer reported in [2008] 298 ITR 32; [2007] 209 CTR 1, the Bombay High Court held that the proceeding cannot be reopened merely because the assessing authority is of the view that the depreciation has been wrongly allowed merely on a change of opinion. In the case of Anil Kumar Bhandari v. Joint Commissioner of Income-tax reported in [2007] 294 ITR 222 (Cal), the deduction was allowed under section 80HHC. The case has been reopened on the ..... 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