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2011 (2) TMI 1522 - ITAT LUCKNOWValidity of Re-Assessment Proceedings u/s 147 - Reason to Believe - non independent application of mind by AO - Borrowed satisfaction - AO initiated proceedings on the basis of information received by investigation wing that the assessee has purchased a plot of land and he could not give any specific clarification during the course of inquiry regarding such investment - As per CIT(A), there was reason to believe for initiating such proceedings HELD THAT:- In the present case, it is crystal clear AO acted upon the information received from the Investigation Wing, where it was not stated that the investment in purchase of land was out of undisclosed income of the assessee or out of income which escaped assessment. As per Sec. 147, AO must have reason to believe that any income chargeable to tax has escaped assessment. However, it cannot be said that if there is any investment it is sufficient to believe that the income to that extent escaped assessment because there may be so many sources for making investment and it is not necessary that only on the basis of investment it can be presumed that the income to that extent escaped assessment. There should be a concrete finding before coming to the conclusion that any income has escaped assessment and merely on the basis of the information provided by any another Wing of the Income-tax Department, the AO cannot believe that there was income which has escaped assessment. In present case, AO simply acted upon the information of ADIT (Investigation) and did not apply his own mind to the information to arrive at a belief independently that on the basis of material which he had before him the income had escaped assessment. We are, therefore, of the view that the ld. CIT(A) was not justified in confirming the action of the Assessing Officer. Therefore, initiation of proceedings u/s. 147 cannot said to be a valid proceeding. We are fortified by the decision of ITO, WARD 6 (2) , KANPUR VERSUS RICH CAPITAL & FINANCIAL SERVICES LTD. [2010 (9) TMI 1214 - ITAT LUCKNOW], where it was held that proceedings u/s 147 cannot be initiated either on the basis of mere suspicion or for making fishing or roving enquiries the initiation of the proceedings u/s 147 of the Act on this ground was also illegal and bad in law. AO without referring to any material which could justify his conclusion that the income of the assessee escaped assessment, instantiated the proceedings u/s. 147, the said action was not justified because the said action appears to be on suspicion and for making roving enquiries. In that view of the matter, assessments framed on the basis of notices issued u/s. 148 are set aside considering the same as illegal and bad in law, hence vitiated - Decision in favour of Assessee
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