TMI Blog1980 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs for those years alleging that he had reasons to believe that the income of the respondent had escaped assessment due to the omission or failure on the part of the respondent to disclose fully and truly all material facts necessary for the assessment of its income for the relevant assessment years. The reasons that were recorded by the ITO are set out below: "In the course of assessment proceedings for 1962-63, it is found during the year of account the assessee introduced various cash credits in its books of accounts as hundi loans. It appears that in the course of original assessment proceedings no enquiries were made to verify the genuineness of these loans. It is now found that most of these creditors were not genuine lenders and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved by the Supreme Court that the reasons for the formation of the belief must have a rational connection with, or relevant bearing to, the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be initiated for reopening the assessment. At the same time, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged confession, it would not be unreasonable to assume that the confession was made a few weeks or months before the report. To infer from that confession that it relates to the period from April 1, 1957, to March 31, 1958, and that it pertains to the loan shown to have been advanced to the assessee, in our opinion, would be rather far-fetched." In the instant case, the ITO placed reliance on the said secret circular containing the names of certain name-lenders alleged to have carried on bogus hundi transactions. The names of some of such name-lenders were entered in the books of account of the assessee for the relevant assessment years as having advanced loans against hundis. There is no indication whatsoever that, for the relevant pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
