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2014 (10) TMI 332 - AT - Income TaxReopening of assessment u/s 147 r.w section 148 – Reason to believe - Land situated within 8 kilometers of municipal limits of Jhansi and hence, being a capital asset within the meaning of section 2(14) of the Act and the gain arising on sale of such land will be chargeable to capital gain tax or not - Held that:- Following the decision in Shri Badam Singh Rajpali Vs. ITO [2012 (7) TMI 160 - ITAT, AGRA] - the reasons for reopening of assessment have been incorporated in the order, which is also reproduced above - The words “reason to believe” suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the ITO may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour - The Income-tax Officer would be acting without jurisdiction if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section - The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court - the only information was that the assessee had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque for that amount - The information did not indicate the source of the capital gains which in this case were shares - There was no information which shares had been transferred and with whom the transaction had taken place - The AO did not verify the correctness of the information received by him but merely accepted the truth of the vague information in a mechanical manner - The AO had not even recorded his satisfaction about the correctness or otherwise of the information for issuing a notice u/s 148 - the AO has not satisfied the ingredients of section 147 of the Act in the reasons recorded for reopening of assessment - the AO has not correctly assumed jurisdiction u/s 147 / 148 of the IT Act – the order of the CIT(A) is set aside – Decided in favour of assessee.
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