TMI Blog2019 (9) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... through serious of judgements of this Court that re-assessment even if in case where return was not scrutinized before the income chargeable to tax has escaped before acceptance originally cannot restore unless the A.O. has reason to believe that the income chargeable to tax has escaped. In other-words, for mere verification or for fishing inquiry, reopening of assessment is not permissible. - R/SPECIAL CIVIL APPLICATION NO. 16881 of 2018 - - - Dated:- 19-8-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Petitioner (s) : MR DARSHAN R PATEL (8486) For The Respondent (s) : MRS MAUNA M BHATT (174) ORAL ORDER ( PER : HONOURABLE MR.JUSTICE A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions of commodities on the platform of NSEL was only paper transactions and actual delivery of commodities had never taken place. According to the revenue, the petitioner had made investment of ₹ 50 Lakhs on 28/3/2011 and the investment was also reflected in the Balancesheet of the petitioner as on 31/3/2011 under the head of investment. According to the revenue, the assessment was booked as a paper transaction and delivery of the commodities in the present case had not taken place and therefore, the same is required to be disallowed. Thus, there is escapement of income and the transaction do not correspondent to the return filed by the assessee and therefore, according to the A.O. he has reason to believe that the income chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner, an amount of ₹ 50 Lakhs is very much receivable, as the said amount is not paid back to the petitioner by the broker. 3.01. Mr.Darshan Patel, learned counsel for the petitioner has also relied upon the decision of the Bombay High Court in the case of T he Pr. Commissioner of Income Tax-5 Versus M/s. Shodiman Investments Pvt. Ltd., rendered in Income Tax Appeal No.1297 of 2015 . 4.00. Ms.Mauna Bhatt, learned Senior Standing Counsel for the revenue has opposed the present petition. She contended that the the impugned notice for reopening has been issued after recording reasons on the basis of information received from the DGIT (Investigation), Mumbai in connection with the alleged irregul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the A.O. formed belief upon analysis of the information reeived that the transactions by Javerilal Oswal Commodities Pvt Ltd. at NSEL Platform were paper transactions which were carried out in absence of actual delivery of commodities. She contended that in other words, the transactions were bogus as delivery of the commodities had never taken place in the case of the petitioner. It is contended that the A.O. independently applied his mind to such information and has formed reason to believe that the income chargeable to tax has escaped assessment by an amount of more than ₹ 1 lac. She contended that the impugned notice is valid and legal. She requested to reject the present petition. 5.00. Heard the Mr.Darshan Pate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material Could be, prima facie, formed to conclude that income chargeable to tax has escaped assessment. Mr. Mohanty, learned Counsel is ignoring the fact that the words whatever reasons is qualified by the words 'having reasons to believe that income has escaped assessment'. The words whatever reasons only means any tangible material which would on application to the facts on record lead to reasonable belief that income chargeable to tax has escaped assessment. This material which forms the basis, is not restricted, but the material must lead to the formation of reason to believe that income chargeable to tax has escaped Assessment. Mere obtaining of material by itself does not result in reason to believe that income has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v/s. CIT 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v/s. Lakhmani Merwal Bus 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee is entitled to challenge the very act of re-opening of Assessment and assuming jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X
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