TMI Blog1990 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... rring to the Supreme Court decision in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, this court issued rule in terms of prayer (a) and passed an interim order in terms of prayer (d). However, despite the specific order, the grounds on the basis of which the Income-tax Officer had issued the impugned notices were not furnished to the petitioner nor was any affidavit-in-reply filed. In the circumstances, the petition was heard on the facts stated in the petition and those borne out from other documents furnished by the petitioner along with its writ petition. The assessments were originally completed ex parte under section 144 on March 28, 1981, even though a raid was conducted at the petitioner's premises on February 13, 1981, when all i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the petitioner. Shir Prem, learned counsel for the petitioner, invited this court's attention to the Supreme Court decision in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 for the proposition that the material on the basis of which the Income-tax Officer forms or can form reason to believe that income has escaped assessment by reason of the assessee's non-disclosure of full and necessary particulars of income must provide a live link or direct nexus between the material and the belief. Any information/material will not be a good material for reopening the assessment under section 147(a). He relied on another Supreme Court decision in the case of ITO v. Madnani Engineering Works Ltd. [1979] 118 ITR 1, in which it was, inter alia, held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer to verify the genuineness of each and every item of material or evidence at the time of assessment. By and large, the evidence/material is believed/accepted and the assessments are completed. It is only when in that case or in the case of some other assessee facts came to the notice of the Income-tax Officer or the Department that certain material or evidence produced by the assessee was not genuine or was bogus that the question of reopening the assessments would arise. March 12, 1990: The Supreme Court has held in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 that the reasons for the formation of the belief contemplated by section 147(a) of the Income-tax Act, 1961, for the reopening of an assessment must have a rational conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the belief that the petitioner's income had escaped assessment. The other contention raised on behalf of the petitioner is equally sound. For assuming jurisdiction to reopen an assessment under section 147(a), another condition necessary is that the reason to believe that income had escaped assessment must be by reason of the failure to file returns of income or non-disclosure of material facts necessary for assessment fully and truly. There is not even a suggestion that the assessee did not file its returns of income. Therefore, the only question to be considered is whether it was or could be by reason of non-disclosure of material facts necessary for assessment fully and truly. This has to be examined on the facts of each case. The Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the books of account showing payment of interest, it was for the Income-tax Officer to investigate and determine whether these documents were genuine or not. The assessee could not be said to have failed to make a true and full disclosure of the material facts by not confessing before the Income-tax Officer that the hundis and the entries in the books of account produced by it were bogus. As stated earlier, the petitioner in this case had disclosed necessary particulars about loan accounts. Such a finding is duly recorded in the assessment orders. In the circumstances, the petitioner cannot be blamed for not further informing the Income-tax Officer that the evidence placed on its behalf may not be genuine. In the above view of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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