9911796707
TMI Blog2024 (3) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 25th March 2021 issued by the Income Tax Officer, Exemption Ward 1(1), Pune under Section 148 of the Income Tax Act, 1961 ("the Act") and the order dated 3rd March 2022 rejecting the objections raised by Petitioner to the notice of reopening the assessment proceedings. 3. Petitioner is a public charitable trust registered under the Bombay Public Trusts Act, 1950. It is also registered under Section 12A of the Act and is thus, eligible to claim exemption under Section 11 of the Act. 4. Petitioner filed its return of income ("ROI") on 30th September 2016 for Assessment Year ("AY") 2016-17 disclosing 'Nil' income claiming exemption under Section 11 of the Act. Petitioner's case was selected for scrutiny and notice under Section 143(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 raising several grounds to suggest that the reopening of the assessment was untenable. The Department, however, proceeded to pass the impugned order dated 3rd March 2022 rejecting the objections of Petitioner. It is this order and the notice dated 25th March 2021, which are challenged in the present Petition. 7. Mr. Naniwadekar, learned counsel appearing for Petitioner submitted that the reasons recorded for the reopening do not at all indicate any tangible reasons to believe that the income chargeable to tax had escaped assessment for the relevant AY. He further submitted that the reopening has been initiated on a mere change of opinion as in the original scrutiny assessment, Respondent No. 1 had already scrutinized the issue of cash d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Report, Petitioner has declared application to charitable or religious purpose at Rs. 2,93,36,695/-. There is thus a difference of Rs. 53,56,087/- on application of fund. He argued that as per instructions of Central Board of Director of Taxes ("CBDT") received under F.No. 225/40/2021/ITA.II dated 4th March 2021, the AO has to consider categories of cases listed therein as 'potential cases' for taking action under Section 148 of the Act, which include reports made by the Directorate of Intelligence & Criminal Investigation (I&CI). As in Petitioner's case, the Jurisdictional Assessing Officer ("JAO") proceeded on the basis of information received from the ITO(I&CI), Kolhapur that income chargeable to tax has escaped assessment. Thereupon r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court in the matter of Commissioner of Income Tax v. ICICI Bank Ltd. 349 ITR 482 (Bombay). The relevant portion of the decision reads as thus: "7. Therefore, the sine qua non to issue a notice for reopening of assessments even within a period of less than four years from the end of the assessment year, is reason to believe that income has escaped assessment and this reason to believe should be on the basis of tangible material, otherwise the exercise of power to reopen would be a review of the assessment order. As held by this court in the matter of Siemens Information Systems Ltd. v. Asst. CIT (2012) 343 ITR 188 (Bom) such tangible material could be even on the basis of fresh material obtained during subsequent assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner that the cash collected was not only deposited in its bank account but was also duly offered to tax. 14. It is settled law that a reason to suspect is not the same as reason to believe. There has to be a rational connection and the live link between the material coming to the notice of the AO and the formation of belief regarding escapement of income. The Apex Court in the matter Sheo Nath Singh v. AACIT (1971) 82 ITR 147 (SC)., has held as under: "....There can be no manner of doubt that the words 'reasons to believe' suggests that the belief must be that of an honest and reasonable person based upon reasonable grounds that the Income Tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for taxation. Thus, there is no material or fact which has been stated in the reasons for reopening assessment in the present case on which any belief can be founded of the nature contemplated by law. 17. The Apex Court in the case of Income Tax Officer, I Ward, Distt.VI, Calcutta and Ors. v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) has held as follows: ".......the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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