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TMI Blog2015 (11) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... information itself being wrong, vague and bereft of any material. We find merit in the argument of ld. Counsel that the reason to believe as formed by the AO are not in terms as contemplated by section 147 and as mandated by the courts in the decisions referred to above. Respectfully following the above referred judgments by the Hon’ble Supreme Court, i.e., Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME Court]; Ganga Saran & Sons P. Ltd. [1981 (4) TMI 5 - SUPREME Court], Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA ] and Sheo Nath Singh [1971 (8) TMI 6 - SUPREME Court] we hold that the AO did not have valid reason to believe that impugned income had escaped assessment. Thereby, the reopening is quashed as bad in law. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire material available on record. Section 147 can be invoked when the Assessing Officer has reason to believe that any income chargeable to tax has eascaped assessment . Thus, the crucial point is that the AO should have proper reason to believe the escapement of income . The words reason to believe and escapement of income have been judicially interpreted by various courts. The Hon ble Supreme Court in the case of Lakhmani Mewal Das (1976) 103 ITR 347 (SC) has held that the powers of the Income-tax Officer to reopen the assessment, though wide, yet are not plenary. The words of the statute are reason to believe and not reason to suspect . The reopening of an assessment is a serious matter and it should be ensured that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the above pleadings and other judgments on the meaning of the words reason to believe , as recorded, we have to examine whether in the assessee s case the reasons as recorded constitute a tangible and correct and are indicative escapement of income in material terms, or they amount to mere suspicion, vague, or incorrect information which ought to have been further verified by the AO from the assessee record, which are not disputed to be available. In order to make a reasonable belief in terms of section 147 the AO should be in possession of some valid information which should have a live nexus with the assessee s record of income. The information should be correct in the first place and should not merely raise suspicion. In the case b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. When the AO has recorded in the reasons that all the cash transactions are recorded in the assessee s books of account, entire edifies of the veracity of the Enforcement Directorate information fails. Besides, in the absence of any information about the non-plausible explanation from the Enforcement Directorate point of view this vague information on its own also cannot be a basis to form a reasoned belief. Thus, in our considered opinion the AO has blindly relied on the suspicion intimated by the Enforcement Directorate. The Assessing Officer on one hand gave a reason that transactions are recorded, on the other hand without making any effort recorded reason to believe to reopen the assessment of the assessee. In our cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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