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2022 (6) TMI 349 - AT - Income TaxReopening of assessment u/s 147 - “reasons to believe" OR “reasons to suspect” - HELD THAT:- As noted above that reasons were recorded by the assessing officer based on “suspect”. Since assessee has not fulfilled the conditions for assessment year 2005-06 and for assessment year 2006-07, therefore assessing officer suspects that assessee would not fulfil the conditions for claiming deduction under section 80IB for assessment year 2007-08 also. Reasons must have a live link with the formation of the belief. This is supported by Circular No.549 dated 31.10.1989 which clarified that the words “reason to believe” did not mean a change of opinion. The Hon’ble Supreme Court in ITO vs Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT] has lucidly explained the power of assessing officer to bring to tax income escaping assessment u/s.147.Hon’ble Court first held that the section provides that there must exist “reasons to believe“ and not “reasons to suspect . The Courts have analysed and explained in several cases as to what could be the valid reason to believe escapement of income, which would enable the Assessing Officer to successfully reopen the assessment. It has been held that the words ‘reason to believe’ are stronger than the words ‘reason to suspect’ or ‘reason to doubt’. It requires more than merely ‘satisfaction’ of the Assessing Officer. The belief entertained by the Assessing Officer must not be arbitrary or irrational. The expression ‘reason to believe’ does not mean purely subjective satisfaction of the Assessing Officer. The belief must be held in good faith. It cannot be merely pretence. Again, the belief must be of an honest and reasonable person based upon reasonable grounds. The Assessing Officer may act upon direct or circumstantial evidence, but his belief must not be based on mere suspicion, gossip or rumours. The Assessing Officer would be acting without jurisdiction, if the reasons for his belief are not material or relevant. There should be nexus between the information coming into possession of the assessing officer and his belief on the basis of such information that income of the Assessee chargeable to tax has escaped assessment. We note that reasons recorded by assessing officer does not stand the test as laid by judicial precedent as discussed above, which is necessary to assume jurisdiction u/s 147 therefore, we find that the reasons recorded by the assessing officer to justify reopening the assessment u/s 147 fails and, therefore, the very assumption of jurisdiction to reassess the assessee fails. Since the assessing officer failed to do so as discussed, the assumption of jurisdiction by him to reopen itself is corum non judice and, therefore, all subsequent action is null in the eyes of law and therefore, we quash the reopening and consequent reassessment order framed by him.
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