https://www.taxtmi.com/caselaws?id=446212 The ITAT Mumbai held that reopening of assessment was invalid as the AO failed to establish "reason to believe" income had escaped assessment. The case involved allegations that the assessee issued shares at premium to paper companies. The tribunal distinguished between "reason to suspect" and "reason to believe," noting that adverse information alone only triggers suspicion, which is insufficient for reopening. The AO must conduct preliminary inquiry and collect material evidence to form a belief about income escapement. Here, despite the assessee collecting Rs. 52 lakhs share premium, the AO failed to identify investors, establish their connection to entry operators, or conduct adequate preliminary inquiry. The recorded reasons lacked specific details about suspected accommodation transactions, rendering the reopening invalid. en-us Wed, 20 Sep 2023 00:00:00 +0530 Tue, 28 Nov 2023 07:42:39 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=446212 The ITAT Mumbai held that reopening of assessment was invalid as the AO failed to establish "reason to believe" income had escaped assessment. The case involved allegations that the assessee issued shares at premium to paper companies. The tribunal distinguished between "reason to suspect" and "reason to believe," noting that adverse information alone only triggers suspicion, which is insufficient for reopening. The AO must conduct preliminary inquiry and collect material evidence to form a belief about income escapement. Here, despite the assessee collecting Rs. 52 lakhs share premium, the AO failed to identify investors, establish their connection to entry operators, or conduct adequate preliminary inquiry. The recorded reasons lacked specific details about suspected accommodation transactions, rendering the reopening invalid. Case-Laws Income Tax Wed, 20 Sep 2023 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=446212