Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (12) TMI 434 - ITAT MUMBAIReopening of assessment u/s 147 - Reason to believe - reason to suspect - HELD THAT:- “Reasons to believe” postulates foundation based on information and belief based on reason. Even if there is foundation based on information, there still must be some reason warrant holding a belief that income chargeable to tax has escaped assessment. Further, it is settled that adverse information may trigger “reason to suspect”, then the AO to make reasonable inquiry and collect material which would make him believe that there is in fact escapement of income. The fine distinction between “right to suspect” and “right to believe” has to be kept in mind while examining the condition precedent for reopening an assessment as stipulated u/s 147 of the Act for the relevant year under consideration (AY. 2009-10). Here in this case, the DGIT (Inv.) had passed on an information regarding the assessee’s claim of expenses to be bogus, which assessee has supposed to have incurred while purchasing goods from certain parties. Having received such an information from the DGIT(Inv.), it should have at best triggered “reason to suspect”, then AO should have made reasonable inquiry and collected material which would make him form a belief that there was in fact escapement of income; but in this case, we note that the reason recorded by the AO before re-opening the assessment does not satisfy the requisite requirement as necessary u/s 147 of the Act to validly reopen the assessment. Therefore, we are inclined to quash the reopening based on the reasons recorded by the AO - And therefore we quash the notice u/s 148 - Therefore, further proceedings stand void in eyes of law. Therefore, the assessee succeeds on the legal issue. Appeal of the assessee is allowed.
|