TaxTMI 
TaxTMI 
2007 (7) TMI 648
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.... the assessee holding reassessment proceedings to be bad in law. 3. Aggrieved with the order passed by the Tribunal, the revenue has come in an appeal under section 260A of the Income-tax Act, 1961 (for short as 'Act') before this Court. 4. For the assessment year 1996-97, the assessee filed its return declaring income of Rs. 23,552 and the same was accepted under section 143(1) of the Act. The loan in the name of M/s. Visa Fin Cap Ltd. was also accepted. Subsequently, the Assessing Officer took proceedings under section 147 of the Act and issued a notice under section 148 of the Act to the assessee-company on 25-11-2002. The basis of initiating the reassessment proceedings was the statement of Sh. V.K. Jain, Director of M/s. Visa Fin....
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....0. The Tribunal after perusing the statement of Sh. V.K. Jain held that:- "On a careful perusal of the statement, we find that, the facts mentioned in the 'reasons' are de hors the facts available on record. The relevant portion of the statement of V.K. Jain dated 18-2-2002 read as under:- "Q. 5. Can you give the names and addresses of the above persons from whom you were receiving cash and giving entries thereafter? Ans. The names and addresses of the persons concerned are the same as shown as loan creditors in the balance sheet filed during the assessment year 1995-96. At present the list along with addresses is not available with me. It will be provided on the next date of hearing. To reconcile the above amount sometimes my name....
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....The power conferred under the said section, particularly after 1-4-1989, is no doubt very wide but it cannot be said to be plenary. True, the amended provisions of section 147 are contextually different from the pre 1989 provision, inasmuch as the cumulative conditions spelt out in clause (a) of old section 147 namely, that income chargeable to tax had escaped assessment by reason of : (i) omission or failure on the part of the assessee to make a return of his income under section 139 of the Act for any assessment year, or (ii) failure to disclose fully and truly all material facts necessary for his assessment for that year, are not present in the new main section but the crucial expression 'reason to believe' still exists in the new provis....
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....ncome has escaped assessment. There should be facts before him that reasonably give rise to the belief, but the facts on the basis of which he entertains the belief need not at this stage be rebuttably conclusive to support his tentative conclusion. In case of challenge, it is open to the Court to examine whether there was material before the Assessing Officer, having rational connection or relevant bearing to the formation of the belief that is claimed to have been held at the time when he issued the notice. But the Court cannot for the purpose of ascertaining validity of the notice examine the sufficiency of the reasons for the belief in S. Narayanappa v. CIT [1967] 63 ITR 219 (SC)." (p. 780) 13. The present case is fully covered by th....