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2014 (6) TMI 118 - HC - Income TaxValidity of notice of reopening of assessment u/s 148 of the Act – Share trading business – Failure in disclosing facts - Held that:- The AO on the basis of the material provided by the investigating wing, particularly the statement recorded under section 131(1)(a) notices the falsehood in the disclosure made by the assessee at the time of original assessment – the AO had rightly assumed the jurisdiction of initiating the reassessment proceedings – AO on the basis of information subsequently having come to his knowledge, recognized untruthfulness of the facts furnished earlier, he surely cannot be said to have changed his opinion on the same facts – Relying upon Sri Krishna P. Ltd. v. ITO reported in [1996 (7) TMI 2 - SUPREME Court] - what amounts to "full" and "true" facts, the SC was of the view that the Income-tax Officer can issue notice u/s 148 of the Act, proposing to reopen an assessment only where he has reason to believe that on account of either the omission or failure on the part of the assessee to file the return or on account of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year, income has escaped assessment. The existence of the reason to believe is intended to be a check, a limitation, upon his power to reopen the assessment - where the information furnished is found to be false, there could not be possibly any objection to the notice u/s 148 - Till completion of scrutiny assessment, the information provided mentioned clearly that investments made by the petitioner were from the funds of the companies and, therefore, there was no question of treating them as bogus - subsequently when on an investigation, after completion of assessment under sub-section (3) of section 143, the same is found to be bogus, notice u/s 148 of the Act deserves to be held valid - To a limited extent, the court has looked into the conclusion arrived at by the AO in examining whether there was any material available on the record for the AO to form a requisite belief and whether such material had any rational link with the income that escaped assessment and from such scrutiny, no inference is called for. Proceedings of reassessment initiated by the AO on the basis of subsequent information which is found to be relevant and specific and when the AO after recording the reasons for formation of his belief that in the original assessment, the assessee failed to disclose fully and truly facts - the income chargeable to tax escaped assessment has correctly exercised the jurisdiction provided u/s 147 of the Act – Decided against Assessee.
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