9911796707
TMI Blog1980 (2) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... rijlal, M/s. Bharat Purchasing Company and M/s. Jhunjhunwalla & Sons Pvt. Ltd. in the accounting years relevant for the assessment years 1953-54 and 1954-55 which are the subject-matter of this appeal. The appellant duly filed its return of income for the aforesaid assessment years. The ITO issued notices calling upon the appellant to furnish full details and particulars regarding the loans on the aforesaid khata peta accounts and interest paid on those loans. In compliance with those notices the appellant disclosed and furnished those particulars and details to the ITO. On March 27, 1958, the ITO passed the assessment order for the assessment year 1953-54 and on March 19, 1959, he also passed the assessment order for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax department that he had done name-lending business without actually advancing any money in the names of M/s. Surajmal Brijlal, M/s. Bharat Purchasing Company and M/s. Jhunjhunwalla & Sons Pvt. Ltd. which were under his direct control. The said confession was received by the ITO in September, 1967, and on the basis of the said confession he had reopened the assessments. As already stated, the confession of Dwarka Prosad was not produced before the learned judge who did not get any opportunity to deal with it. In these circumstances and in view of the aforesaid case of the ITO, we called for the aforesaid confessional statement of Dwarka Prosad which was produced before us by the department. In his confessional statement Dwarka P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration the confession of the son of Dwarka Prosad must, therefore, fail. Dwarka Prosad in his confession has not even mentioned the name of the appellant. Further, there is nothing in his confession to show that it related to the loans to the appellant. These two facts, in our opinion are of pivotal importance, for, substantially on similar facts, assessment was sought to be reopened in the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). In the aforesaid case, there was an entry about the payment of Rs. 74-3-0 annas as interest in the books of the assessee in the name of Mohan Singh Kanayalal who made a confession that he was doing only name-lending. There was nothing to show that his confession related to the loan to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 information 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 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 reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Prosad could not have, therefore, led to the formation of the belief that the income of the appellant had escaped assessment because of its failure or omission to disclose fully and truly all material facts. It must also be hold that the pre-condition for reopening the assessments under s. 147(a) of the Act has not been satisfied in this case. We, therefore, allow this appeal and set aside the judgment and order under appeal by following the aforesaid judgment of the Supreme Court. The rule nisi is also restored and made absolute. The impugned notices and the subsequent proceedings under the impugned notices are also quashed and set aside. There will be no order as to costs. The learned counsel for the revenue now frames the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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