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2011 (3) TMI 1756 - HC - Income TaxChallenging the legality and validity of the initiation of reassessment proceedings - HELD THAT:- In the case on hand, the assessee has not included the CST paid on the closing stock while making its valuation. Similarly, the assessee has not included the 30% of the Excise Duty. The case of the Department is thus the assessee has claimed excess loss of income in its return which is contrary to section 145-A. At this stage, the Department has placed reliance upon Explanation 2(C) to section 147. Sub clause (iv) to clause(c) of Explanation 2 to section 147 supports the Department's point of view that it is a case of deemed escapement of assessment. It is not necessary for us to dwell upon this point any further. The sufficiency of the reason is beyond the scope of scrutiny at this stage. The sufficiency of the material cannot be gone into but relevancy certainly can be gone into. The reasons recorded by the concerned authority are relevant reasons to form a belief that the income of the petitioner has escaped assessment. Therefore, We find no force in the argument of the petitioner that on the basis of the reasons recorded by the AO, the re-assessment proceedings could not have been initiated. There is relevant material to form a belief that the income of the petitioner has escaped income. At this stage, it can be said that there is relevant material on the record to form a reasonable belief that the taxable income of the assessee has escaped assessment, in view of section 145-A.
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