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2012 (10) TMI 157 - DELHI HIGH COURTIndia Japan DTAA - Reopening of assessment - books of accounts did not reflect any specific amount of Japanese yen said to have been received in the previous year - Held that:- A letter received from a governmental agency can constitute valid material on the basis of which the Assessing Officer can assume jurisdiction to reopen the assessment. The only caveat is that the material or information coming to the possession of the AO should not be a mere suspicion, gossip or rumour - As decided in Sheo nath Singh vs. Appellate Assistant Commissioner of Income Tax (Central) Calcutta, and Ors. [1971 (8) TMI 6 - SUPREME COURT] “ reason to believe” should be a honest belief which a reasonable person based upon reasonable grounds would have come to and that the assessing authority “may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour" If these tests are applied to the present case, it is difficult to appreciate the petitioner’s objection that the information received from DAO-45, New Delhi, acting under Article 26 of the Indo-Japanese treaty for the Avoidance of Double Taxation, cannot constitute valid material on the basis of which the AO can form even a tentative or prima facie belief that income to the extent of Rs.11, 28,644/- had escaped assessment - The contention of the assessee that the Japanese authorities have no power to examine the books of accounts of the petitioner and, therefore, to the extent that the information supplied by the DAO-45, New Delhi says that the amount of Rs.11,28,644/- has not been declared by the petitioner, it cannot be taken note of by the AO has no force. As the columnar chart set out in the reasons recorded stated as “gross income paid amount: major unit of currency”. Even assuming that the expression “gross income” has been loosely employed, the very fact that this information was received from a governmental agency under Article 26 of the DTAA constitutes the live link or nexus between the material and the formation of the belief that income to that extent has escaped assessment - writ dismissed - against assessee.
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