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TMI Blog2014 (12) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction, even when payment was not made in the said year - the “reasons to believe” must show live link and nexus with the formation of prima facie opinion that income which should be taxed has escaped assessment - In the absence of any cogent and relevant material or information to show that the amount shown under the head provision included unascertained liability, re-assessment proceedings could not have been initiated - There is a difference between “reasons to believe” and “reasons to suspect”. It was the responsibility of the Revenue to bring on record documents and material to show and establish that the “provisions” related to unascertained liability and the AO while forming his opinion and recording “reasons to believe” was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2006-07 on 30th November, 2006. After issue of notice under Section 143(2), assessment order under Section 143(3) was passed on 24th December, 2008 accepting the returned income. 3. Thereafter, re-assessment notice dated 30th March, 2011, under Section 148 read with Section 147 of the Act, was issued. The said notice and re-assessment order has been set aside by the impugned order passed by the Tribunal dated 29th November, 2012. 4. The reasons to believe as recorded by the Assessing Officer for initiating re-assessment proceedings read as under:- The Income tax Act, 1961, provides that a provision made in the accounts for an accrued or known liability is an admissible deduction, while other provisions made do not qualify fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned and clarified. 6. During the course of hearing before us, we had asked the counsel for the Revenue to point out and show that on what ground and reason the Assessing Officer came to the conclusion that the amounts shown under the head provision was an unascertained liability and not an accrued and certain liability. Noticeably, the respondent-assessee was following the mercantile system of accounting and any liability which had been incurred was to be allowed as a deduction, even when payment was not made in the said year. 7. The Commissioner of Income Tax (Appeals) in the first appellate order has reproduced schedule 13 of the balance sheet, which for the sake of completeness is being reproduced below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce. The Assessing Officer overlooked this fact indicating non-application of mind. 8. The reasons to believe must show live link and nexus with the formation of prima facie opinion that income which should be taxed has escaped assessment. In the absence of any cogent and relevant material or information to show that the amount shown under the head provision included unascertained liability, re-assessment proceedings could not have been initiated. There is a difference between reasons to believe and reasons to suspect . Mere surmise or suspicion cannot be a ground to reopen assessment. 9. It was the responsibility of the Revenue to bring on record documents and material to show and establish that the provisions related to unas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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