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TMI Blog2025 (3) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO to scrutinise the returns for the previous assessment year in question, to determine, whether a notice under section 147 is called for. Predicated on the aforesaid judgments it can be safely inferred that the concept of burden of proof beyond reasonable doubt is not to be applied in cases such as the present one.
We are not persuaded to consider the same. This is for the reason that the learned ITAT misdirected itself in predicating its entire reasoning on an incorrect and inapplicable principle of law, which are confined to purely penal provisions, which is not the case here. Thus, on this error alone the impugned judgement is found to be unsustainable in law. Once the edifice of differentiating "reason to suspect" and "reason to believe" itself is on incorrect application of the principle as explained above, the consequential appreciation on merits too would suffer the same fate.
Ergo, we have no hesitation in quashing and setting aside the impugned judgement passed by the learned ITAT, and we do so. Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee. This is a clear case of assuming jurisdiction u/s 147 of the Act out of sheer suspicion and in order to make roving and fishing enquiries. It is trite law that suspicion howsoever strong cannot partake the character of a legal evidence. The principles laid down by the Hon'ble Apex Court in its recent decision rendered in the context of Criminal Appellate Jurisdiction in the case of Raja Naykar vs State of Chattisgarh in Criminal Appeal No. 902 of 2023 dated 24.1.2024 would be relevant here and would come to the rescue of the assessee herein. For the sake of convenience, the entire order of Hon'ble Apex Court is reproduced below:- "1. This appeal challenges the judgement and order dated 22nd July, 2015, passed by the Division Bench of the High Court of Chhattisgarh, Bilaspur in CRA No. 223 of 2012, thereby dismissing the appeal filed by the Appellant, namely, Raja Naykar (Accused No. 1) and confirming the judgment and order of conviction and sentence awarded to him by the Court of Additional Sessions Judge, Durg (Chhattisgarh) (hereinafter referred to as "Trial Judge") in Sessions Trial No. 14 of 2010 on 23rd November, 2011. 2. Shorn of details, the facts l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommitted criminal conspiracy to destroy the evidence, and threw the body of the deceased after burning the same behind the Baba Balak Nath temple. The prosecution also proved that accused no. 2 helped in throwing the body of the deceased and destroying evidence by way of cleaning the blood stains etc. of the deceased. Thus, the Trial Judge convicted the Appellant for offences punishable under Sections 302 and 201 read with 120B of the Indian Penal Code, 1860 ("IPC" for short) and was awarded a maximum sentence of life imprisonment; whereas Accused Nos. 2 to 4 were convicted for offences punishable under Sections 201 read with 120B of IPC and were sentenced to undergo rigorous imprisonment for five years and fine of Rs.1,000/-. 2.6 Being aggrieved thereby, the Appellant and other accused persons preferred appeals before the High Court through CRA No. 223 of 2012 and CRA No. 38 of 2012 respectively. The High Court by the common impugned judgement, although allowed the appeal filed by the accused nos. 2 to 4; however, it dismissed the appeal filed by the present Appellant and affirmed the order of conviction and sentence awarded to the him by the Trial Judge. 2.7 Being aggrieved t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1952 SC 343 : 1952 SCR 1091 : 1953 Cri LJ 129]. This case has been uniformly followed and applied by this Court in a large number of later decisions up-to-date, for instance, the cases of Tufail (Alias) Simmi v. State of Uttar Pradesh [(1969) 3 SCC 198 : 1970 SCC (Cri) 55] and Ramgopal v. State of Maharashtra [(1972) 4 SCC 625 : AIR 1972 SC 656] . It may be useful to extract what Mahajan, J. has laid down in Hanumant case [(1952) 2 SCC 71 : AIR 1952 SC 343 : 1952 SCR 1091 : 1953 Cri LJ 129]: "It is well to remember that in cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and tendency and they should be such as to exclude every hypothesis but the one proposed to be proved. In other words, there must be a chain of evidence so far complete as not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hypothesis except that the accused is guilty. It has further been held that the circumstances should be such that they exclude every possible hypothesis except the one to be proved. It has been held that there must be a chain of evidence so complete as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probabilities the act must have been done by the accused. 9. It is settled law that the suspicion, however strong it may be, cannot take the place of proof beyond reasonable doubt. An accused cannot be convicted on the ground of suspicion, no matter how strong it is. An accused is presumed to be innocent unless proved guilty beyond a reasonable doubt. 10. In the light of these guiding principles, we will have to examine the present case. 11. On a perusal of the judgment of the Trial Judge as well of the High Court, it would reveal that the main circumstance on which the High Court and the Trial Judge found the appellant guilty of the crime is the recovery of various articles at his instance. They have further found that the pieces of blanket recovered from the place of incident and the place where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Memorandum of the appellant under Section 27 of the Evidence Act. Therefore, only that part of the statement which leads to recovery of the dagger and the rickshaw would be relevant. 15. The Property Seizure Memo would show that the dagger was seized from a place accessible to one and all. According to the prosecution, the incident took place on 21st October, 2009 and the recovery was made on 25th October, 2009. 16. As per the FSL report, the blood stains found on the dagger were of human blood. However, the FSL report does not show that the blood found on the dagger was of the blood group of the deceased. Apart from that, even the serological report is not available. 17. Insofar as the recovery of rickshaw is concerned, it is again from an open place accessible to one and all. It is difficult to believe that the owner of the rickshaw would remain silent when his rickshaw was missing for 3-4 days. As such, the said recovery would also not be relevant. 18. Another circumstance relied on by the Trial Judge is with regard to recovery of blood-stained clothes on a Memorandum of the appellant. The said clothes were recovered from the house of the appellant's sister-in-la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bilaspur in CRA No. 223 of 2012 is quashed and set aside. The appellant is directed to be released forthwith, if not required in any other case. (Emphasis supplied by us hereinabove) 7. In our considered opinion, the principles enunciated in the aforesaid decision by Hon'ble Supreme Court would be squarely applicable to the facts of the instant case before us. The ld. AO while recording the reasons had merely suspected that the movement of funds (both inflow and outflow) in assessee's bank account constitutes income of the assessee. This suspicion was however triggered based on the STR received by the ld. AO. At the cost of repetition, we would like to mention the fact that the assessee is engaged in the business of financing and leasing where obviously there would be huge movement of funds (both inflow and outflow) in the bank account of the assessee. Moreover, all these funds were received from the related entities and invested with the related entities in the regular business of financing and leasing. There is absolutely no income element involved therein. There is no presumption u/s 68 of the Act for the movement of funds between entities to be automatically construed as y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income Tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of grounds which induce the Income Tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the Income Tax Officer did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of reasons for the belief. The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The reason must be held in good faith. It cannot be merely a pretence. It is open to the court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. To this limited extent, the action of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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