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2020 (6) TMI 375 - AT - Income TaxReopening of assessment u/s 147 - absence of sufficient material to form satisfaction of the AO that income of the assessee had escaped assessment - validity of reason to believe - non independent application of mind by AO - HELD THAT:- AO in this case had received the only information that the assessee had received a high premium along with share application money. However, this information alone, in our view, does not constitute any tangible material or to say any incriminating material to form a belief by the Assessing Officer that the income of the assessee had escaped assessment or to say in other words that the share application money received by the assessee was an unaccounted money of the assessee. AO has not recorded that he had received any information that the assessee had received share application money from some bogus / paper companies. No information has been pointed out in the reasons recorded or receipt of any bogus transactions undertaken by the assessee. Even the name of the companies form whom the share premium received has not been mentioned nor there is any allegation that those share applicants were not traceable or they were bogus / paper companies indulged in sham transactions. Mere information that the assessee had received a high premium, in our view, cannot be said to be a reason to form the belief that the income of the assessee had escaped assessment. AO raised a suspicion, as mentioned in the reasons itself, regarding the source of the capital being not genuine or that it may be a modus operandi by the assessee to introduce its undisclosed income by way of share premium , however, this was a mere suspicion of the AO without even an iota of any incriminating tangible material against the assessee or even otherwise. The powers of Assessing Officer to reopen an assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". AO has wrongly and illegally assumed jurisdiction in this case to reopen the assessment. The reasons pointed out by the AO cannot be said to be the reasons “to form the belief” that income of the assessee had escaped assessment. In view of this, since the assessment order framed by the AO is not sustainable in the eyes of law, the same is accordingly quashed. - Decided in favour of assessee.
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