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2020 (2) TMI 1387 - ITAT KOLKATAValidity of reopening of assessment - main grievance of the assessing officer is that assessee is engaged in ‘Hawala Transactions’ - HELD THAT:- To initiate reopening of the assessment, the Ld. AO must have 'reason to believe’ that income chargeable to tax has escaped assessment. Such reason to believe must be based on some material coming to the possession of AO which may trigger ‘reason to suspect’. It must be kept in mind that the “reason to believe” must have a rational connection with or relevant bearing on the formation of the belief, i.e, there must be the direct nexus or link between the material and the formation of such belief. Since in the instant case, the reopening was initiated to verify certain information or to conduct enquiry. The reopening of assessment in the assessee`s case was initiated on the basis of ‘FEMA’ information but the ‘FEMA’ dropped the proceedings before date of reassessment on 17/03/2015 and AO did not make any addition based on FEMA transaction. Amount escaped from assessment is not known at the time of issue of notice u/s 147/148 . On receipt of reasons, the assessee is entitled to file objections to issuance of notice and the A.O. is bound to dispose of the same by passing a speaking order. We note that AO has not disposed of the objections of the assessee by passing a speaking order. AO having not carried out the scrutiny assessment within the prescribed statutory limit, cannot be given another innings for no fault of the assessee and therefore in the facts and circumstances of the case, we are of the considered opinion that ‘reason to believe’ which is the jurisdictional precondition to reopen the assessment as required by the law has not met in the reasons recorded in the instant case - Decided in favour of assessee.
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