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2023 (9) TMI 988 - HC - Income TaxReopening of assessment - reasons to believe - Power of court to investigate reopening - reasons to believe or suspicion - HELD THAT:- While the Court cannot investigate into the adequacy or sufficiency of the reasons, which have weighed with the ITO in coming to the belief, the Court can certainly examine whether the reasons are relevant and have a bearing on the matter in regard to which the AO is required to entertain the belief before he can issue notice u/s 148 - If there is no rational or intelligible nexus between the reasons and the belief, the exercise undertaken by the ITO can be interfered with. The reason recorded only indicates that the officer was only wanting to examine the case of assessees with regard to the deposits, that also on the basis of report which he received from another Investigating Officer. Obviously, in such a case, there is no question of the AO having any basis to reasonably entertain the belief that any part of income of the assessee had escaped assessment. Thus, if more details are sought or some verification or examination is proposed, that cannot be a substitute for the reasons and which led the AO to believe that income chargeable to tax has escaped assessment. In the present case, Respondents do not state that income chargeable to tax has escaped assessment. All that the Revenue desires is to examine certain details pertaining to information that it received from another AO. That is also not founded on the belief that any income, which is chargeable to tax, has escaped assessment and hence, such verification is necessary. That belief is not recorded which alone would enable the AO to proceed. The reasons must be founded on the satisfaction of AO that income chargeable to tax has escaped assessment. Once that is not to be found, then the impugned notice cannot be sustained. The reasons as recorded at the highest, can only be termed as “a suspicion subject to a case of fishing inquiry”. Even though the Revenue has a greater latitude in re-opening an assessment where the return of income has been processed u/s 143(1) of the Act, even in such cases the re-opening of an assessment can only be done if there is reason to believe that income chargeable to tax has escaped assessment. The reasons which have been recorded, could never lead a prudent person to form an opinion that income had escaped assessment within the meaning of Section 147 - Decided in favour of assessee.
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