TMI Blog1990 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account in respect of various loan transactions including the loans alleged to have been given to the assessee, the finding of the Tribunal that there was no live nexus leading to the formation of the belief that the income of the assessee escaped assessment because of the assessee's failure to disclose fully and truly all material facts is unreasonable and/or perverse? 2. Whether, on the facts and in the circumstances of the case and having regard to the fact of receipt of information in the form of the confessional statement of the loan creditor by the Income-tax Officer after the completion of the original assessment, the Tribunal was justified in holding that the provisions of section 147(b) have also no application to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who made the assessment perused the primary facts disclosed by the assessee in terms of loans from Nandkishore Lachminarain of No. 25, Burtola Street, Calcutta. The said Income-tax Officer also issued summons under section 131 of the Act to Messrs. Nandkishore Lachminarain for verification of the loans. At the original assessment stage, the assessee also filed a confirmed copy of accounts from Messrs. Nandkishore Lachminarain. The assessee submitted that the Income-tax Officer making the original assessment accepted the loans as genuine after making necessary enquiries. The assessee contended that the assessment proceeding was reopened on a mere change of opinion. The Commissioner of Income-tax (Appeals) accepted the contention of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after considering the facts and circumstances of the case and considering the principles laid down by the several decisions cited before the Tribunal, held that the Income-tax Officer had no jurisdiction to initiate proceedings in this case. The initiation was made on a mere change of opinion. No one appeared before us for the assessee. The contention raised before the Tribunal had been reiterated. It may be mentioned at the very outset that the finding of the Tribunal that there was no omission or failure on the part of the assessee to disclose fully and truly all the material facts has not been challenged by any appropriate action. We have already set out the reasons which had been recorded by the Income-tax Officer for reopening the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court held as follows (at page 447) : "We may now deal with the first ground mentioned in the report of the Income-tax Officer to the Commissioner of Income-tax. This ground relates to Mohansingh Kanayalal, against whose name there was an entry about the payment of Rs. 74 annas 3, as interest in the books of the assessee, having made a confession that he was doing only name-lending. There is nothing to show that the above confession related to a loan to the assessee and not to someone else, much less to the loan of Rs. 2,50 which was shown to have been advanced by that person to the assessee respondent. There is also no indication as to when that confession was made and whether it relates to the period from April 1, 1957, to March 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The fact that the words 'definite information' which were there in section 34 of the Act of 1922, at one time before its amendment in 1948, are not there in section 147 of the Act of 1961, would not lead to the conclusion that action can now be taken for reopening assessment even if the formation is wholly vague, indefinite, farfetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. The powers of the Income-tax Officer to reopen an assessment, though wide, are not plenary. The words of the statute are 'reason to believe' and not 'reason to suspect'. The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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