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2020 (1) TMI 547 - AT - Income TaxValidity of reopening of assessment u/s 147 - 'reason to believe' or 'reason to suspect' - “reasons recorded” which warrant holding a belief that income chargeable to tax has escaped assessment - HELD THAT:- From the reasons already set out above and from the gist of the reasons recorded by the AO, we understand that the AO received information from ITO, Wd. 6(3), Kolkata. We note that reasons recorded by AO are only on the basis of appraisal report. These reasons are merely to conduct further inquiry, which is evident from the second para of the reasons recorded by AO. Reasons recorded by the AO that there was actually no reason for him to have formed a belief about the escapement of any income of the assessee from the assessment, but the assessment was reopened by him to verify or to conduct further enquiry or to examine certain particulars furnished by the assessee in the return of income.Therefore, it is abundantly clear from the reasons recorded that these are based on appraisal report to conduct further inquiry only.Therefore, it is clear that there is no independent application of mind by AO. If the AO decides to reopen the assessment, he has to satisfy the condition precedent to assume jurisdiction. In the assessee`s case the information was received by ITO ward 6(3), and even if the information given by theITO ward 6(3), is adverse against the assessee, at the most it may trigger “reason to suspect”; then AO has to make reasonable enquiry and collect material which would make him believe that there is in fact an escapement of income. Without doing so, the jurisdictional fact necessary to usurp jurisdiction to reopen the regular assessment cannot be made by the AO. Reasons recorded by the Assessing Officer are only “reason to suspect” and the AO has acted based on the information received by him from another Income Tax Officer which is for the purpose to conduct further inquiry only. The reasons recorded by AO to reopen has to be evaluated on a stand-alone basis and no addition/extrapolation can be made or assumed while adjudicating the legal issue of AO’s usurpation of jurisdiction u/s. 147. The information given by another Income Tax Officer, based on appraisal report of Badalia Group cases, can only be a basis to ignite/trigger “reason to suspect” for which reopening cannot be made for further examination to be carried out by him in order to strengthen the suspicion to an extent which can form the belief in his mind that income chargeable to tax has escaped assessment. No quantification of income escaping assessment has been spelt out by the AO in the reasons recorded for justifying reopening u/s. 147 - Decided in favour of assessee.
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