TaxTMI 
TaxTMI 
2016 (1) TMI 949
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....ssment. At the request of the petitioner, he also supplied reasons for issuing such notice which reads as under : "Assessee Shri Murlibhai Fatandas Sawlani is one of the Director in M/s. Shantai Reality (India) Ltd. He was having more than 10% share holding of the said company. During the AY.200809, M/s. Shantai Reality (India) Ltd. has shown following reserves in balance sheet. (a) Reserves on account on share premium Rs. 6, 75, 38,100/ (b) Reserves on account of profit Rs. 1,92,19,545/ Total Reserves Rs. 8,68,57,645 2. During FY 2007~08 relevant to AY.200809, company had given advance of Rs. 1,00,00,000/to Shri Murlibhai Fatandas Sawlan as "advance to suppliers" and the balance is Still continuing till AY.20131....
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....ann.com 123 (Gujarat) and in case of Bakulbhai Ramanlal Patel v. Income Tax Officer reported in 56 DTR 212. 4. On the other hand, learned counsel Shri Sudhir Mehta for the department submitted that the original assessment was not framed after scrutiny. Question of change of opinion therefore, would not arise. The Assessing Officer having formed a bona fide belief that the income chargeable to tax has escaped assessment, notice for reopening could not be quashed. He submitted that such reason had to be based on prima facie consideration and not a final conclusion. 5. Counsel drew our attention to the affidavit in reply filed by the Assessing Officer in which it is pointed out that the petitioner who was the director of M/S. Shantai Reality....
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....ny assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under sec....
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....ave reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a) But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit ....
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....for non scrutinized assessment cases, has recognised that reopening of assessment would be permissible provided that the Assessing Officer had some tangible materials on the basis of which he could form a reason to believe that income chargeable to tax had escaped assessment. It was held as under : "13. Despite such difference in the scheme between a return which is accepted under section 143(1) of the Act as compared to a return of which scrutiny assessment under section 143(3) of the Act is framed, the basic requirement of section 147 of the Act that the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment is not done away with. Section 147 of the Act permits the Assessing Officer to assess, reass....
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....for reopening of an assessment which was accepted previously under section 143(1) of the Act without scrutiny, the Assessing Officer should have reason to believe that income chargeable to tax has escaped assessment. Reverting to the facts of the present case, we notice that in two out of four reasons recorded by the Assessing Officer for reopening the assessment, he stated that he need to verify the claims. In the second ground, he had recorded that admissibility of the bad debts written off required to be verified. In the fourth ground also, he had recorded that admissibility of royalty claim was required to be verified. We are in agreement with the contention of the counsel for the petitioner that for mere verification of the claim, po....