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2014 (5) TMI 1005 - ALLAHABAD HIGH COURTReassessment - Validity of notice u/s 148 of the Act – Reason to believe – Held that:- Under Section 147 of the Act, proceedings initiated for re-assessment proceedings can only be done if the Assessing Officer had reasons to believe, namely, that any income chargeable to tax had escaped income in any assessment year - The assessee had disclosed the gift cheques in his return filed u/s 139 of the Act - no notice was issued to the petitioner u/s 143(2) of the Act by the AO and the returns were accepted by issuance of an intimation u/s 143(1) of the Act – u/s 143 of the Act, it is the discretion of the AO to accept the return as it is or to proceed further with the assessment of income - once the AO decides to proceed, he has to issue notice u/s 143(2) of the Act within the prescribed period, at the relevant moment of time, was 12 months to make the assessee aware that his return has been selected for scrutiny assessment. The material came into existence during post search enquiry when it became known that the gift cheques shown in the return filed u/s 139 of the Act were not regular transactions but were purely arranged transactions to avoid income tax - income disclosed in the return filed u/s 139 of the Act could not become "undisclosed income", merely because in post search enquiry, it came known that the gift cheques was a sham transaction - An amount which has already been included in the regular assessment cannot be assessed again in the course of block assessment - The gift cheques, having been disclosed in the return u/s 139 of the Act could not be re-assessed in block assessment proceedings u/s 158BC - The authorities were justified in not including the gift cheques in block assessment proceedings. The material found in post search enquiries could form a "reason to believe" that income had escaped assessment by issuance of a notice under Section 143(2) of the Act - the period u/s 143(2) of the Act had expired, the AO having genuine reasons to believe that income had escaped assessment and consequently, could issue a notice u/s 148 of the Act - Such notices so issued were perfectly justified and was within the powers of the Assessing Officer – Relying upon Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited [2007 (5) TMI 197 - SUPREME Court] - the expression "reason to believe" in Section 147 of the Act would mean cause of justification to know that income had escaped assessment - at the stage of issue of notice, the only question is, whether there was relevant material on which a reasonable person could form the requisite belief that income had escaped assessment - the AO was justified in forming an opinion, that income had escaped assessment and was justified in issuing notice u/s 148 of the Act – thus, the notice u/s 148 of the Act is upheld – Decided against Assessee.
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