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2023 (8) TMI 634 - AT - Income TaxReopening of assessment - confirming notional income on account of client code modification - ‘reason to believe’ towards escapement of income - HELD THAT:- The instances of transactions resulting in loss/profit to the assessee on account of client code modification do not feature in the reasons at all. The reasons recorded appears to be a token exercise for assumption of jurisdiction and without compliance of jurisdictional parameters. AO in the instant case has proceeded on a hypothesis flowing from a generic information rendering the whole exercise to be arbitrary and unsustainable in law. The believe towards escapement in the instant case is only pretense and a mere doubt and suspicion towards probable escapement though worded as ‘reasonable to believe’. The Hon’ble Supreme Court in Lakhmani Mewal Das [1976 (3) TMI 1 - SUPREME COURT] has underscored that the word of the statute ‘reason to believe’ are not ‘reason to suspect’. The vague feeling or suspicion of the AO towards possible escapement would not permit to reopen a completed assessment in defiance of statutory requirement of substantial nature. The notice issued under Section 148(1) is thus ultra vires the provision of Section 147 of the Act.Thus considerable force in the plea of the assessee for non maintainability of re-assessment order passed in pursuance of a notice u/s 148 of the Act which is vitiated in law. Decided in favour of assessee.
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