This is a petition under article 226 of the Constitution. It seeks to quash two notice under section 21 of the U.P. Sales Tax Act issued by the Sales Tax Officer for the assessment year 1966-67.

For this assessment year, the petitioner was assessed in respect of its turnover under the Central Sales Tax Act by an assessment order, a copy whereof is annexure A to the petition. By a separate order, the petitioner was also assessed to sales tax under the U.P. Sales Tax Act (annexure B). Subsequently, on 20th March, 1971, the petitioner received 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 notices under section 21 be issued against him.

The assessee has come to this court on the ground that the statement in the order does not constitute any valid material on the basis of which the Sales Tax Officer could have reason to believe in terms of section 21 of the Act. Section 21 provides :

"If the assessing authority has reason to believe that the whole or any part of the turnover of the dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing notice to the dealer, and making such enquiry, as may be necessary, assess or reassess him to tax."

Section 34 of the Income-tax Act, 1922, provided for a similar situation. Sub-section (1A) thereof authorised the Income-tax Officer to issue a similar notice if he had reason to believe that income, profits or gains chargeable to tax had escaped assessment. Dealing with section 34(1A), the Supreme Court in Sheo Nath Singh v. Appellate Assistant Commissioner ([1971] 82 I.T.R. 147 (S.C.)), held that "there can be no manner of doubt that the words 'reason to believe' suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, guessing or rumour. The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always 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 proceedings in the present case on which any belief could be founded of the nature contemplated by section 34(1A). The so-called reasons are stated to be beliefs thus leading to an obvious self-contradiction."

This case is applicable on facts. In the present case, the Sales Tax Officer obtained some information from the income-tax department that in the course or proceedings in that department, it came to light that the assessee had su