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2021 (9) TMI 517 - HC - Income TaxReopening of assessment u/s 147 - Unexplained cash credit - penny stock purchases - Eligible reasons to believe - whether failure on part of the petitioner to disclose fully and truly all material facts? - assessment sought to be reopened after the expiry of a period of four years from the end of the relevant year - HELD THAT:- Nowhere in the reasons for reopening, it is mentioned that the tangible materials were obtained or received much after the original assessment order was passed. Moreover, the statement of Bhanwarlal Jain recorded on 11th October 2013 has been relied upon, whereas the original assessment, after considering the statement and all other material, was completed on 20th December 2016. We repeatedly asked Mr. Suresh Kumar to identify the fresh tangible material that was available with the department and the date on which it was received to which there was no answer because it is not stated in the reasons for reopening. Therefore, we cannot accept the reason for reopening with regard to the entries regarding these five entities. As regards the penny stock tangible material upon the basis of which the Assessing Officer comes to the reason to believe that income chargeable to tax has escaped assessment can come to him from any source, however, reasons for the reopening has to be only of the AO issuing the notice. No such tangible material is disclosed in the reasons for reopening. AO simply says Kolkata Investigation Wing have analyzed the trade data of identified 84 penny stocks and concluded that most of the purchases in penny stocks on abnormally higher rate are being done by these paper companies and one of those penny stock is Shreenath in which petitioner was found to be involved in trading. This is far too general. We have to agree with petitioner that there is no tangible material for the reopening as stated in the reasons for reopening. AO was aware of the fact that the script of Shreenath was allegedly a penny stock company as it is clear from the annual information report given by the Assessing Officer himself to petitioner alongwith the first notice. Therefore, there is no question of any further information on the same issue being treated as information so as to justify the reopening of the assessment. The expression "reason to believe" in Section 147 of the Act has been held to mean a cause or justification. - Decided in favour of assessee.
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