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TMI Blog2005 (3) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... loss and it is required to be held that the exercise of recording reasons on the file is a mere pretence to give validity to the exercise of power for assuming jurisdiction. In other words, it was a colourable exercise of jurisdiction and cannot be sustained in law - In the result, the impugned notice issued under section 148 of the Act is quashed and set aside X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to reopen the completed assessment and, therefore, the impugned notice came to be issued. It has further come to the knowledge of the petitioner that the respondent has, even after issuance of the impugned notice, not accepted the objections taken by the audit party and ask them to withdraw the same and reiterated that he still has no reason to believe that some income has escaped the assessment. In other words, when the impugned notice was issued the respondent did not hold any belief that the income of the petitioner has escaped assessment for any reason. Legally it is well-settled that in the case of reopening 'the reason to believe' must be that of an Assessing Officer and it cannot be substituted with anyone else's belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the case'. Thereafter, on November 11, 2004, the Assessing Officer wrote to the Deputy Accountant General (ITRFA), objecting to the audit note and stated that 'under the circumstances, the audit objection is not acceptable and needs to be dropped'. The aforesaid objection was submitted through the Additional Commissioner of Income-tax, who vide his letter dated December 7, 2004, endorsed the view of the Assessing Officer objecting to the audit note in the following words: "Keeping in view of the facts stated by the Assistant Commissioner of Income-tax, it is seen that the audit objection raised in the case of the above named assessee on the issue involved is not acceptable as the return of income for the assessment year 2001-02 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 under intimation to audit as per communication dated January 17, 2005. The reasons which have been recorded on May 12, 2004, are as under: "Reasons recorded for reopening of the assessment. Dated May 12, 2004 The assessee is a share-broker, filed its return of income for the assessment year 2001-02 on October 30, 2001, declaring total loss at Rs. 2,70,85,105. The return was processed under section 143(1) on November 26, 2002, on the same loss, as shown at Rs. 2,70,85,105. On verification of assessment records of the assessee it is seen that the assessee has debited to the profit and loss account bad debt of Rs. 1,285.72 lakhs. The total loans and advances and sundry debtors outstanding for the accounting year 1999-2000 were Rs. 989 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that satisfaction of the Assessing Officer for the purpose of reopening is subjective in character and the scope of judicial review is limited. When the reasons recorded show a nexus between the formation of belief and the escapement of income, a further enquiry about the adequacy or sufficiency of the material to reach such belief is not open to be scrutinised. However, it is always open to question the existence of such belief on the ground that what has been stated is not the correct state of affairs existing on record. Undoubtedly, in the face of the record, the burden lies, and heavily lies, on the petitioner who challenges it. If the petitioner is able to demonstrate that in fact the Assessing Officer did not have any reason to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces the conclusion is irresistible that the belief that income has escaped assessment was not held at all by the officer having jurisdiction to issue notice and recording under the office note on February 8, 1997, that he has reason to believe is a mere pretence to give validity to the exercise of power. In other words, it was a colourable exercise of jurisdiction by the Assessing Officer by recording reasons for holding a belief which in fact demonstrably he did not hold that income of the assessee has escaped assessment due to erroneous computation of deduction under section 80HHC, for the reasons stated by the audit. The reason is not far to seek." In the aforesaid decision, the court has also taken note of the instruction of the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X
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