TaxTMI 
TaxTMI 
2012 (10) TMI 157
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....this case, the information was received from DAO-45, New Delhi, that the assessee has received amounts in Yen from Mitsui & Co. Ltd. in A Y 2006-07 as under: Name Address Gross income paid currency code Gross income paid amount: Major unit of currency Actual payer keyname F Y Mitshui & Co. India Pvt. Ltd. G Floor, The Metropolitan Centre, Bangla Sahib Road, Gole Market, New Delhi JYP 2665644 Mitsui & Co. Ltd. 2005-06 Total -Do- 3430535 In view of the above, I have reasons to believe that the income of JPY 2665344 (Rs. 1128644) chargeable to tax has escaped assessment within the meaning of section 147/148 of the Income Tax Act, 1961. Dated: 28.03.2011 (Dr. Sheodan Singh Bhadoriya) Dy. Commissioner of Income Tax Circle-6(1), New Delhi" 2. On the basis of the above reasons, a notice to reopen the assessment on the ground of escapement of income was issued to the petitioner on 29th March, 2011 and the petitioner was called upon to file the return of income. In response, the petitioner wrote to the Assessing Officer asking for a copy of the reasons recorded for initiating the reassessment....
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....ring the relevant previous year. 4. It is in response to the aforesaid letter dated 16th September, 2011 that the petitioner wrote a detailed letter under the subject "Objections to notice under section 148 dated 28th March 2011 as per law declared by Hon'ble Supreme Court in case of GKN Driveshaft (India) Ltd Vs. ITO (2003)259 ITR 19 (SC)" and strongly objected to the continuation of the reassessment proceedings on the ground that the assumption of jurisdiction was invalid. It was pointed out that the reasons recorded by the Assessing Officer showed that there was nothing on record, much less any material, apart from the information received from DAO-45, New Delhi to sustain the claim of escapement of income. It was urged that there was no live link between the material before the Assessing Officer and the belief that income chargeable to tax had escaped assessment, which was a prime requirement for the valid assumption of jurisdiction as held by the Supreme Court in the case of ITO vs. Lakhmani Mewal Dass (1976) 103 ITR 437. It was also submitted that the Assessing Officer did not himself reach the satisfaction regarding escapement of income but was acting on the satisfacti....
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....nder Section 143(3) and that the return filed by the petitioner was only processed under Section 143(1), and that in this background any information received from an authentic source that the petitioner had received an amount from outside India which was not reflected in its accounts would certainly give rise to "reason to believe" that income chargeable to tax at escaped assessment. It has been averred in the counter that the information was received from the foreign tax authorities under the aegis of the OECD on which the respondent had no control. It is stated that the credibility of the information cannot be, therefore, questioned. It is further averred in the counter that the information pertains only to an amount which was not disclosed by the petitioner in its accounts or return of income and, therefore, it was all the more incumbent upon the Assessing Officer to issue notice reopening the assessment on the ground of escapement of income. It was further stated that at the stage of issuing notice under Section 148 reopening the assessment, the Assessing Officer is not required to firmly establish that the amount sought to be included represented the income of the assessee;....
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....essing Officer has for the first time stated that the amount of Rs.11,28,644/- mentioned in the information received by the Assessing Officer represented interest. The contention is that the respondent is trying to supplement or improve the reasons recorded by reference to extraneous material which is impermissible. Reliance is placed on the judgment of this Court in Commissioner of Income Tax vs. SFIL Stock Broking Ltd. (2010)325 ITR 285 in support of the contention that the reasons recorded for reopening the assessment shall not be vague and scanty and the material before the Assessing Officer shall be such that it could constitute material on the basis of which a prima facie belief could be entertained that income chargeable to tax had escaped assessment in the hands of the petitioner. 10. The contention of the Revenue, however, is that the Assessing officer validly acted on the basis of information received from the DAO-45, New Delhi, who was passing on the information under Article 26 of the DTAA between India and Japan. Counsel for the Revenue drew our attention to the judgment of the Supreme Court in I.T.O vs. Selected Dalurband Coal Co. Pvt. Ltd. (1996) 217 ITR 597, wher....
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....come of the assessee: CIT vs. Mahaliram Ramjidas (1940) 8 ITR 442 (PC) and Narayanappa vs. CIT (1967) 63 ITR 219. He is required only to reach prima facie or tentative belief. The formation of the belief must be based on some valid material. It cannot be disputed that the information received from a governmental agency constitutes valid material on the basis of which the Assessing Officer could form a tentative or prima facie belief regarding escapement of income. In Income Tax Officer vs. Selected Dalurband Coal Co. Pvt. Ltd. (1996) 217 ITR 597, a judgment cited on behalf of the Revenue, the facts were these. Against notice under Section 147(a) of the Act, issued to the assessee on the basis of a letter from the Chief Mining officer showing that a joint inspection was conducted in the colliery of the assessee by the officers of the mining department in the presence of the representatives of the assessee and that according to the information of all the officers of the mining department there was under-reporting of the raising figure (of coal) to the extent indicated in the letter, the assessee filed a writ petition before the Calcutta High Court which was allowed. The Revenue ca....
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.... notice, the only question is whether there was relevant material, as slated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have now to go on we do not and we ought not to express any opinion on merits." 12. The judgment is authority for the proposition that a letter received from a governmental agency can constitute valid material on the basis of which the Assessing Officer can assume jurisdiction to reopen the assessment. The only caveat is that the material or information coming to the possession of the Assessing Officer should not be a mere suspicion, gossip or rumour. In Sheo nath Singh vs. Appellate Assistant Commissioner of Income Tax (Central) Calcutta, and Ors. (1971) 82 ITR 147, the Supreme Court held that " reason to believe" should be a honest belief which a reasonable person based upon reasonable grounds would have come to and that the assessing authority "may act on direct or circumstantial evidence bu....