TMI Blog2010 (4) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ng cash – held that - Supreme Court in Rajesh Jhaveri (2008 -TMI - 6563 - SUPREME Court) made it absolutely clear that before an Assessing Officer issues a notice under Section 148, thereby re-opening the assessment under Section 147 of the said Act, he must have formed a belief that income had escaped assessment and that there must be some basis for forming such a belief. The Supreme Court made it clear that the basis of such belief could be discerned from the material on record which was available with the Assessing Officer. However, the Supreme Court in Rajesh Jhaveri (2008 -TMI - 6563 - SUPREME Court) did not say that it was not necessary for the Assessing Officer to form a “belief” and that the mere fact that there was some material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany has stated on oath that the transactions through bank account No. 003097 of Corporation Bank were only paper transactions in which the party was intending to take bills paid in cash and issue cheques/ drafts showing the said amounts as sale of shares. It was further informed that the assessee was neither a share broker nor a member of any stock exchange and that he was doing the work of giving entries. Further information was given that the entry of Rs 20,70,000/- in account No. 003097 dated 28.02.98 and 01.03.1998 was nothing but entry taken by paying cash. Thereafter, on the basis of the aforesaid information, a notice under Section 148 of the said Act was issued by the Assessing Officer to the assessee, which was allegedly the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred an appeal before the Commissioner of Income Tax (Appeals), who confirmed the order passed by the Assessing Officer. Thereafter, the appellant preferred a second appeal before the Income Tax Appellate Tribunal in which an additional ground with regard to the assumption of jurisdiction on the part of the Assessing Officer under Section 147/148 of the said Act was taken. It is on this additional ground that the Income Tax Appellate Tribunal has agreed with the assessee's submission and quashed the entire re-assessment proceeding. 5. The Tribunal, following the decision of this Court in the case of CIT v. Atul Jain: 299 ITR 383 (Del), held that the facts of the present case were virtually identical to those of Atul Jain (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO: [1991] 191 ITR 662, for initiation of action under Section 147(a) (as the provision stood at the relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe" is triggered. He submitted that in the present case, if one were to examine the reasons recorded prior to issuance of the notice under Section 148, there is only an information which has purportedly been received from the Deputy Director of Income Tax (Investigation) followed by a direction given by the same Deputy Director to proceed under Section 148 and another direction given by the Assessing Officer's immediate superior officer, namely, the Additional Commissioner of Income Tax to also issue a notice under Section 148 of the said Act. Therefore, according to the learned counsel for the respondent/ assessee, there was no "belief" whatsoever formed by the Assessing Officer that there was any escapement of income. He has mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under Section 148 and the third sentence again comprises of a direction given by the Additional Commissioner of Income Tax to initiate proceedings under Section 148 in respect of cases pertaining to the relevant ward. These three sentences are followed by the following sentence, which is the concluding portion of the so-called reasons:- "Thus, I have sufficient information in my possession to issue notice u/s 148 in the case of M/s SFIL Stock Broking Ltd. on the basis of reasons recorded as above." 10. From the above, it is clear that the Assessing Officer referred to the information and the two directions as "reasons" on the basis of which he was proceeding to issue notice under Section 148. We are afraid that these cannot be th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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