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2016 (1) TMI 450 - AT - Income TaxReopening of assessment - information received from the investigation wing - accommodation entries - Held that:- AO proceeded to issue notices for reassessment on the basis of information received from the investigation wing of the Department about the existence of accommodation entries providers. It is a settled legal position that at the stage of issue of notice u/s 148, the merits of the matter are not relevant and the AO at that stage is required to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment. However, once that stage is crossed and the reassessment proceedings are set in motion, the material on the basis of which the requisite belief was formed by the AO has to be appraised and examined. It is seen that the reassessment proceedings were initiated entirely on the basis of specific information received from the investigation wing and it was during the course of inquires from the bank by the investigation wing that it was revealed that the assessee was a beneficiary of some accommodation entries. As per the reasons recorded, it is evident that the AO did not corroborate or examine the information received from the investigation wing before recording his own satisfaction of escaped income and initiating the reassessment proceedings. In light of the aforesaid discussion, we are inclined to hold that in the instant case, the AO proceeded to initiate proceedings u/s 147 of the Act and to issue notice u/s 148 of the Act only on the basis of information received from the investigation wing of the Department. There is no material on record to show that the AO had applied an independent mind in forming a belief which may result in the required reason to believe as per the provisions of Section 147 and 148 of the Act - Decided in favour of assessee
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