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TMI Blog2023 (9) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... The reason recorded only indicates that the officer was only wanting to examine the case of assessees with regard to the deposits, that also on the basis of report which he received from another Investigating Officer. Obviously, in such a case, there is no question of the AO having any basis to reasonably entertain the belief that any part of income of the assessee had escaped assessment. Thus, if more details are sought or some verification or examination is proposed, that cannot be a substitute for the reasons and which led the AO to believe that income chargeable to tax has escaped assessment. In the present case, Respondents do not state that income chargeable to tax has escaped assessment. All that the Revenue desires is to examine certain details pertaining to information that it received from another AO. That is also not founded on the belief that any income, which is chargeable to tax, has escaped assessment and hence, such verification is necessary. That belief is not recorded which alone would enable the AO to proceed. The reasons must be founded on the satisfaction of AO that income chargeable to tax has escaped assessment. Once that is not to be found, then the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been filed. 3. It is Petitioners case that notices have been issued that cannot, by any stretch of imagination, indicate any reason to believe that income chargeable to tax has escaped assessment. Mr. Pardiwala submitted that the reason recorded is more reason to suspect than reason to believe. Hence, the prerequisite of re-opening of assessment is not satisfied. There is also no material relied upon from which a reasonable inference can be drawn that the cash deposit in the bank account, referred to in the reasons recorded, represents any income chargeable to tax that has escaped assessment. The reasons recorded indicate that the notice has been issued entirely at the behest of the Deputy Commissioner of Income Tax ( DCIT ) - 4(1) and the Assessing Officer ( AO ) did not have any reason of his own that any income chargeable to tax has escaped assessment. 4. Mr. Pardiwala submitted that indisputably the law is clear that AO has power to re-open under Section 147 of the Act provided there is tangible material to come to the conclusion that there is escapement of income from assessment, but the reasons must have a live link with the formation of the belief. The reasons to believe c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and not on borrowed satisfaction. 8. Relying on the order passed by this Court in Principal Commissioner of Income-tax-32 v. Rajesh D. Nandu (HUF) [2019] 101 taxmann.com 401 (Bombay)., Mr. Pardiwala submitted that the reason as recorded at the highest only shows it is a suspicion subject to inquiry. In fact, this is a case of fishing inquiry and thus, there is no material available with AO to have the reason to believe that income chargeable to tax has escaped assessment. 9. Mr. Pardiwala also submitted, relying on a judgment of this Court in Nivi Trading Limited v. Union of India and Anr. 2015 (64) taxmann.com 92 (Bom)., where the facts were almost similar, that if more details are sought or some verification is proposed, that cannot be a substitute for the reasons which led the AO to believe that an income chargeable to tax has escaped assessment. 10. Mr. Chhotaray opposed and at the outset submitted that it is rather a strange coincidence that AO noticed that in case of all 14 Petitioners, the returned income is around Rs. 3,00,000/- to Rs. 4,00,000/- but each Petitioner/assessee has deposited the exact amount of Rs. 7,00,000/- in cash in each account and, therefore, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied himself to the existence of the conditions precedent to arrive at a conclusion for re-opening the assessment. 13. Relying on the judgment of the Apex Court in Assistant Commissioner of Income Tax v. Rajesh Zaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC). Mr. Chhotaray submitted that at the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the material would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO, is within the realm of subjective satisfaction. 14. A Division Bench of this Court in the case of Prashant S. Joshi and Another v. Income Tax Officer and Anr. 2010 (324) ITR 154 (Bom.)., after considering Rajesh Zaveri (supra), observed that the Apex Court has held that so long as the ingredients of Section 147 of the Act are fulfilled, the AO is free to initiate proceedings under Section 147 of the Act. When an intimation has been issued under Section 143(1) of the Act, the AO is competent to initiate reassessment proceedings provided that the requirements of Section 147 of the Act are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gating Officer. Obviously, in such a case, there is no question of the AO having any basis to reasonably entertain the belief that any part of income of the assessee had escaped assessment. Thus, if more details are sought or some verification or examination is proposed, that cannot be a substitute for the reasons and which led the AO to believe that income chargeable to tax has escaped assessment. 19. In the present case, Respondents do not state that income chargeable to tax has escaped assessment. All that the Revenue desires is to examine certain details pertaining to information that it received from another AO. That is also not founded on the belief that any income, which is chargeable to tax, has escaped assessment and hence, such verification is necessary. That belief is not recorded which alone would enable the AO to proceed. The reasons must be founded on the satisfaction of AO that income chargeable to tax has escaped assessment. Once that is not to be found, then the impugned notice cannot be sustained. 20. The reasons as recorded at the highest, can only be termed as a suspicion subject to a case of fishing inquiry . Even though the Revenue has a greater latitude in re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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