TMI Blog2022 (6) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... ason to believe escapement of income, which would enable the Assessing Officer to successfully reopen the assessment. It has been held that the words reason to believe are stronger than the words reason to suspect or reason to doubt . It requires more than merely satisfaction of the Assessing Officer. The belief entertained by the Assessing Officer must not be arbitrary or irrational. The expression reason to believe does not mean purely subjective satisfaction of the Assessing Officer. The belief must be held in good faith. It cannot be merely pretence. Again, the belief must be of an honest and reasonable person based upon reasonable grounds. The Assessing Officer may act upon direct or circumstantial evidence, but his belief must not be based on mere suspicion, gossip or rumours. The Assessing Officer would be acting without jurisdiction, if the reasons for his belief are not material or relevant. There should be nexus between the information coming into possession of the assessing officer and his belief on the basis of such information that income of the Assessee chargeable to tax has escaped assessment. We note that reasons recorded by assessing officer does not st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Commissioner of Income Tax (Appeals) has erred in confirming the addition by way of disallowance of deduction U/s.80IB made by the learned assessing officer in the assessment order framed U/s.143(3) r.w.s 147 of the Act on the basis of some other grounds, which does not form part of the reasons recorded for re-opening the assessment. 3.At the outset, Learned Counsel submits that assessee has raised additional grounds of appeal challenging the validity of reassessment under section 147 of the Act. These additional grounds are on legal issue, which goes to the root of the matter, and facts are already on records, therefore Learned Counsel prays the Bench that these additional grounds of appeal may be admitted. On the other hand, Learned DR for the Revenue has opposed the additional grounds raised by the assessee and stated that assessee did not challenge the validity of reopening of assessment during the appellate proceedings, therefore, at this stage the assessee cannot raise the additional ground. 4.We have heard both the parties on this preliminary issue. We note that assessee did not raise objections against the reasons recorded u/s 147 of the Act in the course of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of assessment proceedings in A.Y 2005-06 and A.Y. 2006-07, it was observed that the assessee is not fulfilling the basic conditions for claiming the deduction u/s 80IB. therefore, the claim of deduction u/s 80IB was disallowed. In the year under consideration assessee has also claimed the deduction u/s 80IB. This is a recurring issue and not entitle for claiming the deduction u/s 80IB. Therefore, I am satisfied and have reason to believe that the income chargeable to tax more than Rs.1 lacs has escaped assessment, for reopening within the meaning of Section 147 of the Act. Therefore, notice u/s 148 of the I.T. Act is issue. Place :Vapi Sd/- B.M. Meena Date: 01/03/2011 (B.M.Meena) Income-tax Officer Vapi Ward-1, Vapi. 8.We have gone through the above reasons recorded by the Assessing Officer, wherein we find that Assessing Officer has re-opened the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment for assessment year 2007-08 and reasons were recorded based on suspect. 9.From the above analysis of the reasons recorded by the assessing officer, it is abundantly clear that reasons recorded by the assessing officer are bad in law and not as per the provisions of section 147 of the Act. The reasons recorded by the Assessing Officer are not standalone basis, these reasons were recorded by using probability/guess work, there is complete non-application of mind by assessing officer and moreover, the assessing officer has failed to point out tangible material for assessment year 2007-08. 10.As we have noted above that reasons were recorded by the assessing officer based on suspect . Since assessee has not fulfilled the conditions for assessment year 2005-06 and for assessment year 2006-07, therefore assessing officer suspects that assessee would not fulfil the conditions for claiming deduction under section 80IB for assessment year 2007-08 also. Reasons must have a live link with the formation of the belief. This is supported by Circular No.549 dated 31.10.1989 which clarified that the words reason to believe did not mean a change of opinion. The Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t not be arbitrary or irrational. The expression reason to believe does not mean purely subjective satisfaction of the Assessing Officer. The belief must be held in good faith. It cannot be merely pretence. Again, the belief must be of an honest and reasonable person based upon reasonable grounds. The Assessing Officer may act upon direct or circumstantial evidence, but his belief must not be based on mere suspicion, gossip or rumours. The Assessing Officer would be acting without jurisdiction, if the reasons for his belief are not material or relevant. There should be nexus between the information coming into possession of the assessing officer and his belief on the basis of such information that income of the Assessee chargeable to tax has escaped assessment. 12. Thus, we note that reasons recorded by assessing officer does not stand the test as laid by judicial precedent as discussed above, which is necessary to assume jurisdiction u/s 147 of the Act, therefore, in the light of the aforesaid facts and circumstances of the case as discussed above , we find that the reasons recorded by the assessing officer to justify reopening the assessment u/s 147 fails and, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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