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2013 (8) TMI 958 - HC - Income TaxReopening of assessment - Held that:- 'Reason to believe' does not mean that the assessing officer should have finally ascertained the fact by legal evidence. It only means, the examination that is required to be made on the basis of information that the assessing officer has received and if he discovers or finds as satisfied that the taxable income has escaped assessment, suffice it to state that he had reason to believe that such income had escaped assessment. Job work done by FFIPL for the petitioner, by itself and nothing more, cannot deprive the petitioner from claiming deduction under Sec.10B of the Act, is a pure question of fact that has to be decided based upon an enquiry. It is well settled law that it is for the authorities to lift the veil and ascertain the true nature of transaction that has taken place as between FFIPL and the petitioner., who claim to be sister-organizations, carrying on identical business. It is useful to notice that FFIPL could not make any further claims for deduction under Sec.10B of the Income Tax Act after the period, specified therein, whence the petitioner-company was incorporated and two years thereafter purchased the machinery of FFIPL disclosing the value of the old machinery was less than 20%. It is elsewhere said that tax planning may be legitimate provided it is within the framework of law. However colorable devices cannot be part of tax planning. The reasons assigned by the Deputy Commissioner to reject the objections of the petitioner in the exercise of jurisdiction under Sec. 147/148 of the Income Tax Act for the assessment year 2006-07 cannot be said to be either arbitrary or irrational calling for interference in exercise of extraordinary writ jurisdiction under Art.226 of the Constitution of India
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