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of <h1>Tax Reassessment Invalidated: Income Tax Officer Fails to Provide Substantive Reasons for Challenging Taxpayer's Returns</h1> The SC examined the validity of a reassessment notice under Income Tax Act sections 147, 148, and 151(2). The Court found the notice invalid due to lack ... Income From Undisclosed Sources - income tax officer only had a vague feeling that there might be bogus transactions - notice issued under s. 148 is invalid Issues: Whether the notice issued under section 148 of the Income-tax Act, 1961 (issued after four years but within eight years from the end of the relevant assessment year) is valid when the Income-tax Officer's report and the Commissioner's approval do not record adequate reasons as required by section 151(2) and section 148(2).Analysis: The question examines compliance with statutory prerequisites for reopening assessments: section 148 requires the Income-tax Officer to record reasons before issuing a notice and to include in the notice requirements analogous to a notice under section 139(2); section 151(2) prohibits issuance of a notice under section 148 after four years from the end of the relevant assessment year unless the Commissioner is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. The material produced shows that the Income-tax Officer's report merely referred vaguely to communications suggesting alleged creditors may be name-lenders and that an investigation was necessary, without stating facts or prima facie conclusions establishing reasons to believe income had escaped assessment under clause (a) or (b) of section 147. The Commissioner's approval consisted only of recording 'Yes' to satisfaction without independent reasons. Such form-only entries do not satisfy the statutory requirement of recorded reasons establishing a fit case to issue a section 148 notice and therefore fail to confer jurisdiction to reassess.Conclusion: The notice under section 148 is invalid and is quashed; the appeal is allowed in favour of the assessee.
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