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TMI Blog2021 (2) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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. 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 KALPANA KALA KENDRA VERSUS SALES TAX OFFICER, CIRCLE-20, KANPUR [ 1988 (12) TMI 318 - ALLAHABAD HIGH COURT] . In that case also, the original assessment order was silent as to the enquiry, if any, to accept the returned turnover. However, at the stage of the initiation of the reassessment proceedings under Section 21 of the Uttar Pradesh Sales Tax Act, 1948, three factual basis existed on the record that gave rise to the reason to believe that tax had escaped assessment. These were (i) wide discrepancy noted with respect to value of purchases of the assessee, (ii) escapement of tax on the closing stock and (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment from tax - there was a jurisdictional error on part of the assessing officer in initiating the assessment proceeding. The question of law is answered in the negative i.e. in favour of the assessee and against the revenue - Revision allowed. - Sales/Trade Tax Revision No. - 126 of 2017 - - - Dated:- 3-2-2021 - Hon'ble Saumitra Dayal Singh, J. For the Revisionist : Nishant Mishra For the Opposite Party : C.S.C. ORDER 1. Heard Sri Nishant Mishra, learned counsel for the applicant and Sri B.K. Pandey, learned Standing Counsel for the revenue. 2. The present revision has been filed against the order of the Commercial Tax Tribunal, Bench-1, Noida in Second Appeal no.217/13 for A.Y. 2007-08 (UP) dated 31.12.2016. By that order, the Tribunal has partly allowed the assessee's appeal. While, it has upheld the initiation of reassessment proceeding for the A.Y. 2007-08 (UP), it has modified the rate of tax on Multi Function Digital (MFD in short), from 10% (as unclassified commodity) to 8% (as other electronic goods), under Notification No.K.A.N.I.-2-5746/XI-9(236)/96-U.P. Act-15-48-Order- (30)-2002 dated 13.12.2002. 3. The revision has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unclassified commodity under the 'Act', for A.Y. 2007-08 (1.4.2007 to 31.12.2007). It is on record, acting on the reason to believe as recorded in the notice dated 15.05.2012, permission of the Additional Commissioner was sought to initiate reassessment proceedings for the A.Y. 2007-08 (01.04.2008 to 31.12.2007). Rejecting the explanation furnished by the assessee, it was subjected to tax on MFD vide reassessment order dated 10.07.2012 as an unclassified commodity @ 10%. The appeal therefrom was dismissed by the Additional Commissioner, vide his order dated 10.04.2013. Further, appeal filed by the assessee has been partly allowed treating the commodity to be covered under the notification entry other electronic goods @ 8%. 8. Having heard learned counsel for the parties and having perused the record, in the first place, the principle that has to ever remain clear is - the assessee may be subjected to reassessment proceeding only when the jurisdictional fact is first found to exist. That fact is the existence of a valid reason to believe that any turnover has escaped assessment to tax . On that principle, in The Commissioner of Sales Tax, U.P. Vs M/S. Bhagwan I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing authority on such reason to believe as arbitrary and bad in law. In case of the same material being present before the assessing authority during both, the assessment proceedings and the issuance of notice for reassessment proceedings, it cannot be said by the assessing authority that reason to believe for initiating reassessment is an error discovered in the earlier view taken by it during original assessment proceedings. (See Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan [ Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan , (1980) 4 SCC 71 : 1980 SCC (Tax) 348] . 30. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between the change of opinion and the material present before the assessing authority. Discovery of an inadvertent mistake or non-application of mind during assessment would not be a justified ground to reinitiate proceedings under Section 21(1) of the Act on the basis of change in subjective opinion ( CIT v. Dinesh Chandra H. Shah [ CIT v. Dinesh Chandra H. Shah , (1972) 3 SCC 231] ; CIT v. Nawab Mir Barkat Ali Khan Bahadur [ CIT v. Nawab Mir Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uffers from a factual fallacy. There was no entry available under the Act to tax computer peripherals . That entry first appeared only by virtue of Entry no.22 of Part B of Schedule II of the VAT Act. Therefore, there was no question of introducing that entry in the assessment proceedings under the Act or to examine that entry for the purpose of either making an assessment under the Act or to re-open any assessment under that Act. That fact was plainly or completely extraneous to the assessment made under the Act. Then, it is otherwise equally wrong to assume, as a fact, that the commodity MFD had been taxed @ 4% treating it to be the computer peripheral, since, the original assessment order did not make any reference of any taxing entry of computer peripheral . 13. Besides the factual fallacy and therefore the non-existence of any material based on which a reason to believe may have been recorded, it is also apparent from the reading of the notice dated 15.5.2012 that solely on account of the aforesaid error, the goods MFD were believed to be unclassified commodity. No reason was recorded for the same. The assessing authority did not look into the relevant taxing entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modity MFD was liable to be taxed @ 4% under the Act being computer hardware. It was therefore offered to tax @ 4% and was also accepted in the assessment proceedings. Correctness or otherwise of the conclusions reached at the assessment proceedings apart, and on which no finding is necessary to be reached in these proceedings and none is being recorded, it is to be examined whether any reason to believe had been recorded that any tax had escaped assessment. 15. Consequently, while it may have been open to the assessing officer to record adequate reason to believe , at the relevant time that MFD was not covered under the taxing entry - computer hardware and, therefore, liable to tax under any other entry or as unclassified goods, however, the reassessment proceedings being based on occurrence of the jurisdictional fact being recording of the reason to believe based on material and evidence on record, it cannot be assumed or implied that such a reason to believe was necessarily existing or was inherent in the proceedings. 16. The existence of a valid reason to believe must be established as a fact, by the revenue, before a valid reassessment proceeding may arise. Record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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