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TMI Blog2015 (3) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... elieve recorded. The words "reason to believe" indicate that the belief must be that of a reasonable person based on reasonable grounds emerging from direct or circumstantial evidence and not on mere suspicion, gossip or rumour. The "reason to believe" recorded in the case do not refer to any material that came to the knowledge of the Assessing Officer whereby it can be inferred that the Assessing Officer could have formed a reasonable belief that the said amount had escaped assessment. The purported belief that income has escaped assessment is not based on any direct or circumstantial evidence and is in the realm of mere suspicion. The requirement of law is "reason to believe" and not "reason to suspect". In the present case, since the purported reasons to believe recorded indicate that the Assessing Officer has acted on mere surmise, without any rational basis, the action of reopening of the Assessment is thus clearly contrary to law and is unsustainable. - Decided in favour of assessee. - W.P.(C) No.5330/2014 - - - Dated:- 27-3-2015 - Badar Durrez Ahmed And Sanjeev Sachdeva,JJ. For the Petitioner : Mr K.R. Manjani, Advocate For the Respondent: Ms Suruchi Aggarw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07, 2007-08, and 2008-09 were dropped. The proceedings were also dropped for the Assessment Years 2009-10, 2010-11, and 2011-12 as no incriminating information was received for proceeding under section 153(C). 7. On 18.03.2014, notice under section 148 of the Act for re-opening of assessment was issued on the ground of escapement of income. The petitioner was also supplied the reasons for issuance of notice under section 148 alongwith the notice. The reasons for re-opening of the assessment as communicated to the petitioner are as under:- Reasons recorded U/s 148(2) of the income Tax Act, 1961 M/s Krown Agro Foods Pvt. Ltd. H-78, Shivaji Park, Road No-45, Punjabi Bagh, New Delhi-110017 A.Y. 2012-13. Information has been received from ADIT (Inv.), Ghaziabad, that amount of ₹ 5,00,000/- has been found u/s 132A of the IT Act dated 25.05.2012 in the case of Sh. Anil Kumar Dhir who is the director of M/s Krown Agro Foods Pvt. Ltd. In consequence of this information, summons dated 05.01.2012 u/s 131(1A) was issued and he was examined on oath. When asked about the source of cash of ₹ 5,00,000/- he stated that ₹ 2,00,000/- was withdrawn from And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o one can be allowed to take the advantage of one's own wrong is settled law. The reason that because you did not take timely action, the assessee should suffer is wrong and against settled law. On this account alone, the action is arbitrary and bad in law. 2. THERE IS NO CONCEALMENT, WHICH IS A PRIMARY REQUIREMENT FOR ISSUE OF NOTICE UIS 148 The amount of aforesaid ₹ 5.00 lakh was from withdrawal of ₹ 2.00 lakh each from the Banks of these companies 1-2 days before this date and ₹ 1.00 lakh was cash available in the books. The amount was taken by the Police not because the assessee had no explanation but because of the instructions of the Election Commission that no one is permitted to carry cash over ₹ 2.5 lakh. The explanation which is supported by documentary evidence like copy of Bank Statements and also the Cash Book, does not in any way, lead to the proposition that this amount is unexplained especially because the amount was carried from Office in Delhi to Branch in Ghaziabad by the Director of two companies and for use of their companies in Ghaziabad. Even otherwise, it is settled law that mere possession of money does not lead to presumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, that the Director, Mr. Anil Kumar Dhir was carrying cash of ₹ 3,00,000/- which was claimed to have been withdrawn from M/s Krown Bakers (India) Private Ltd. account for business purposes only. There is another addition of ₹ 9,43,279/- on account of discrepancy noted in the manufacturing results. Hence, it is evident that the information received in the case of M/s Krown Agro Foods Private Ltd. also needs to be examined and the credit worthiness of the assessee has to be proved beyond doubt to accept the claim of Mr. Anil K. Dhir. Therefore, the proceedings u/s- 147/148 have been initiated to safeguard the interest of revenue and in consideration of the assessment completed in the case of M/s Krown Bakers (India) Private Ltd for A.Y. 2012-13 as well. The assessee has not submitted anything other than the return to be able to verify its claim against the amount seized. The assessee company has capital of only ₹ 1,00,000/- and has filed a Return showing a loss of ₹ 49,88,706/-. In view of these facts, it becomes essential to verify the source of ₹ 2,00,000/- and the purpose for which it was brought to Ghaziabad during election time. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion formed is subjective but the reasons recorded or the information available on record must show that the opinion is not a mere suspicion. (iv) Reasons recorded and/or the documents available on record must show a nexus or that in fact they are germane and relevant to the subjective opinion formed by the Assessing Officer regarding escapement of income. (v) In cases where the first proviso applies, there is an additional requirement that there should be failure or omission on the part of the assessee in disclosing full and true material facts. Explanation to the Section stipulates that mere production of books of accounts or other documents from which the Assessing Officer could have, with due diligence, inferred material facts, does not amount to full and true disclosure of material facts . (The proviso is not applicable where reasons to believe for issue of notice are recorded and notice is issued within four years from the end of assessment year.) 11. It would be the proximity of the reasons with the belief of escapement of income, which would be the determinative factor for reopening of the assessment. The remoteness of the reasons would obviate the possibility ..... X X X X Extracts X X X X X X X X Extracts X X X X
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