TMI Blog2012 (7) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of suspicion and it could not be said that it was based on belief that the income chargeable to tax had escaped income - Assessing Officer had to act on the basis of “reasons to believe” and not on “reasons to suspect” - Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and therefore the issuance of notice under section 148 of the Act for reassessment proceedings was not valid - appeal of the assessee is allowed - ITA No. 358/Agra/2011 - - - Dated:- 22-6-2012 - SHRI BHAVNESH SAINI, AND SHRI A.L. GEHLOT, JJ. Appellant by : Shri S.K. Agarwal, C.A. Respondent by : Shri Suhail Akhtar, Jr. D.R. ORDER Per Bhavnesh Saini, J.M.: This appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as recorded by the AO for issuance of notice u/s. 148 are reproduced as under : Reasons recorded u/a. 148(2) of the IT Act, 1961 in the case of Shri Badam Singh Rajpoot S/o Shri Ram Prasad R/o 195, O/S Unnao Gate, Distt. Jhansi, AY 2004-05. The ITO 6(3), Jhansi has informed that during the assessment proceedings in the case of M/s. Sahara City Homes (P) Ltd., Jhansi, it was noticed that above assessee has sold land worth ₹ 19,50,000/- on 05.08.2003 as per govt. value ₹ 11,40,000/-. In order to make confirmation with regard to value of land, a notice u/s. 133(6) was issued and served upon the assessee. It was required in the notice to confirm land transaction and also to intimate as to how the capital gain aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t mean a purely subjective satisfaction on the part of the AO. The reasons must be held in good faith and cannot be mere pretence. The detailed submissions of the assessee on merits are also noted in the impugned order. The ld. CIT(A) considering the issue of reopening of assessment, noted in para 2.2 of the appellate order that at the stage of initiation of reassessment proceedings u/. 148 of the IT Act, it is a trite law that the AO should have reason to believe that income assessable to tax has escaped assessment. It need not to prove conclusively and accordingly, upheld the reassessment proceedings u/s. 148 of the IT Act and dismissed the appeal of the assessee on this reason. 3. The ld. counsel for the assessee reiterated the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation received from ITO 6(3), Jhansi that the assessee earned any capital gains out of the sale transaction of land in question. There was no material with the AO to prima facie prove that the assessee earned capital gain because he wanted the assessee to intimate as to how capital gain arises out of the transaction. Since no reply was submitted in this regard before the AO, therefore, the AO presumed that the income chargeable to tax has escaped assessment and he initiated proceedings u/s. 147 of the IT Act. The reasons recorded by the AO, therefore, do not satisfy the requirement of section 147 of the IT Act. The AO had not examined the information received from the ITO 6(3), Jhansi before recording the reasons for reopening of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain Smt. Vinita Jain, 299 ITR 383 held There must be reason to believe warranting the issuance of a notice of reassessment by the Assessing Officer. If there are no reasons, then the entire foundation for initiating the proceedings is bad and the notice initiating proceedings must be quashed. Mere satisfaction of the Assessing Officer for the issuance of a notice is not enough, there must be reasons on record which led him to believe that a notice should be issued. After a foundation based on information is set up, there must still be some reasons which warrant the holding of a belief so as to necessitate the issuance of a notice under section 148 of the Income-tax Act, 1961. The assessee purchased shares and subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g more than a report given by him to the Commissioner. The submission of the report was not the same as recording of reasons to believe for issuing a notice. The Assessing Officer had clearly substituted form for substance and therefore the action of the Assessing Officer was not sustainable. 4.2 Hon ble Punjab Haryana High Court in the case of CIT vs. Smt. Paramjit Kaur, 311 ITR 38 held The assessee filed her original return declaring nil income. The Assessing Officer initiated reassessment proceedings on the basis of information received from the survey circle that the assessee had got prepared a demand draft for a sum of ₹ 83,040 which was not accounted in the books of account of the assessee. On appeal by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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