2011 (2) TMI 760

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....sh the copy of purchase deed of land purchased for Rs. 39,16,875 and explain the source of purchase of land. The assessee furnished the details as required. The AO had deputed an Inspector to make local enquiry and report the value of land purchased by the assessee. He observed that the land had been sold to the assessee by Vishal Trycom (P) Ltd., Bikaner for Rs. 32,45,115 plus extra consideration for stamp duty paid at Rs. 1,12,260, whereas as per certificate granted under section 54 by the Sub-Registrar the value of the land was Rs. 64,99,980 for stamp duty purpose. He therefore, contended that the assessee had given Rs. 31,42,605 out of books. The AO accordingly initiated proceedings under section 148. The assessee in its reply, submitte....

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....all the facts the AO made an addition of Rs. 31,42,605 under section 69. 3. The learned CIT(A) annulled the re-assessment proceedings. Being aggrieved, the Department is in appeal before us and has taken following grounds : "On the facts and in the circumstances of the case, the learned CIT(A) has erred in- (i)  cancelling the proceedings initiated under section 148 of the IT Act, 1961 by holding that the action of the AO is not consistent with the relevant provisions of Act and cannot be held to be lawful, though the AO has initiated the proceedings under section 148 of the IT Act, after recording reasons in writing as required by the IT Act. (ii) Deleting the addition of Rs. 31,42,605 made by the AO under section 69 of th....

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....escapement of income. There has to be reason for formation of belief and the reason should be such, from which prima facie it could be inferred that there is escapement of income. Every reason, if remotely connected with the issue, cannot be said to be a sufficient reason for formation of belief regarding escapement of income. There has to be live nexus between the reason and formation of belief regarding escapement of income. Merely because the stamp valuation authority has adopted certain valuation for payment of stamp duty, the same cannot be a basis to conclude regarding escapement of income in the hands of purchase particularly when no tangible material has been brought on record to suggest the escapement of income except the Inspector....