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TMI Blog2021 (12) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. If the AO has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. We note that in assessee`s case, the reasons recorded by the assessing officer are not reason to believe rather these are reason to suspect . Reasons must have a live link with the formation of the belief. This is supported by Circular No. 549 dated 31.10.1989 which clarified that the words reason to believe did not mean a change of opinion. The Hon ble Supreme Court in ITO vs. Lakhmani Mewal Das [ 1976 (3) TMI 1 - SUPREME COURT] has lucidly explained the power of assessing officer to bring to tax income escaping assessment u/s. 147. In the present case, the assessing officer assumed the jurisdiction u/s 147 of the Act solely on the basis of the information received from the Investigation Wing, Mumbai with reference to the search carried out by the Investigation Wing, Mumbai in the case of Shri Gautam Jain and Others. The own satisfaction of the AO for the alleged escapement of income is the prerequisite condition for initiating the reassessment proceedings, which is absent in the present case. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 69,53,846/- made by the assessing officer on factually incorrect inferences, but exclusively based on the report of the Investigation Wing of the department is liable to be struck down. (3) Your assessee further reserves its right to add, alter or to amend any of the aforesaid grounds before or at the time of hearing of an appeal. 3. The facts of the case which can be stated quite shortly are as follows: On the basis of the information received from, the Investigation Wing Mumbai the assessing officer found that assessee has taken accommodation entries of bogus purchase bills from Gautam Jain, Prop. of M/s Mihir Diamonds of Rs. 7,80,847/- and Shri Gautam Jain, Director M/s Krishna Diamond Pvt. Ltd. of Rs. 61,73,099/-. The case was reopened u/s 147 of the Act and the notice u/s 148 was issued on 28.03.2014. In response to the notice the assessee filed the written submission on 28.04.2014 and enclosed a copy of the return filed for assessment year 2007-08, as being filed in compliance to notice u/s 148 of the Act. The reasons recorded for the reopening was provided to the assessee during the course of the assessment proceedings. The assessing officer found that assessee had pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the case laws relied upon, and perused the fact of the case including the findings of the ld CIT (A) and other materials brought on record. We note that by way of this appeal, in ground no.1, the assessee has challenged correctness of the order passed by the assessing officer under section 143(3) r.w.s. 147 of the Income Tax Act 1961 dated 27.03.2015 and stated that reassessment proceedings are invalid. Therefore, it is necessary to examine the reasons recorded (vide assessee's paper book page no.224) by the assessing officer under section 147 of the Act, which is reproduced below: 8. From the above reasons recorded, it is vivid that reasons were recorded based on the information received from DDIT Investigation wing Mumbai that search was carried out by the investigation wing, Mumbai in the case of Gautam Jain others (Surat Diamond concerns) group of Mumbai. The group is indulged in providing bogus purchase bills / unsecured loans through various benami concerns. We note that unsecured loans is not a subject matter or an issue in the case of assessee under consideration; therefore, it seems that assessing officer did not apply his mind while recording reasons. Thus, reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reasons to believe and not reasons to suspect . The following were the relevant observations: The fact that the words definite information which were there in section 34 of the Act of 1922, at one time before its amendment in 1948, are not there in section 147 of the Act of 1961, would not lead to the conclusion that action can now be taken for reopening assessment even if the information is wholly vague, indefinite, far-fetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. The powers of the Income-tax Officer to reopen assessment, though wide, are not plenary. The words of the statute are reason to believe and not reason to suspect . The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. 11. The purpose behind the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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