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2023 (7) TMI 867 - HC - Income TaxReopening of assessment u/s 147 - reason to suspect v/s reason to believe - Allegation that companies were paper companies which acted as conduits to facilitate loan transactions of the kind that SGCPL claimed to have entered into - HELD THAT:- SGCPL had indicated to the AO that the return already filed should be treated as a return filed in response to the notice issued u/s 148 of the Act. Furthermore, the AO did, in a sense, pay ostensible obeisance to the provisions of Section 147 of the Act (as obtaining at the relevant point in time) by recording that SGCPL had failed to disclose, truly and fully, all material facts. That said, the AO grievously erred in referring to sub-clause (i) of clause (c) appended to Explanation 2 to Section 147 of the Act, which had been removed from the statute with effect from 01.04.1989. Section 292B of the Act can have no application in the instant case, as a perusal of the reasons placed on record seems to indicate that the AO did attempt to tie in the said provision with his assertion that the respondent/assessee had failed to disclose, truly and fully, all material facts concerning the AY in issue. A mistake, which can be corrected u/s 292B of the Act, should be such that if excised it does not change the tenor and scope of the documents/proceedings referred to therein i.e., the return of income, assessment, notice, summons or other proceedings, taken, furnished or made or issued or taken or purported to have been furnished or made or issued or taken against the assessee under the provisions of the Act. The reasons disclosed and placed on record do not allude to the material that was available to the AO which persuaded him to form a belief that income in the concerned AY, pertaining to SGCPL, which was otherwise chargeable to tax, had escaped assessment. The reasons did not advert to the material that was available to him and which persuaded him to form a belief that income chargeable to tax had escaped assessment. That this was a jurisdictional prerequisite is a well-established principle, as reason to suspect is qualitatively different from reason to believe. The statutory [prerequisite] condition was not met by the AO before entering the realm of reassessment/assessment proceedings. [See Chuggamal Rajpal v S.P. Chaliha and Ors. [1971 (1) TMI 9 - SUPREME COURT] - Decided in favour of assessee.
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