TaxTMI 
TaxTMI 
2007 (5) TMI 184
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...., these shares were sold at a much higher value through another broker Satish Kumar Goel, proprietor of R.K. Aggarwal and Co. The assesses had disclosed long term capital gains arising from the transaction. 3. It appears that some intra-departmental information was received by the Assessing Officer to the effect that the assesses had taken a bogus entry of long term capital gain after paying the equivalent amount in cash together with premium for the accommodation entry to Satish Kumar Goel. This information was received from the Deputy Director of Income Tax (Investigation), Gurgaon. Based on the information received, the Assessing Officer took action to issue a notice under Section 148 of the Income Tax Act, 1961 (the Act) to the asses....
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....ls allowed. 9. The Revenue has preferred two separate appeals against the combined order passed by the Tribunal. We heard submissions made by learned counsel for the parties and are of the view that there is no error in the opinion expressed by the Tribunal and that no substantial question of law arises for our consideration. 10 Broadly speaking, the view taken by the Assessing Officer (and which is canvassed before us) was that the assesses had invested their money received from undisclosed sources and taken back the amounts through a negotiable instrument. The amounts so invested were treated as undisclosed income and the Assessing Officer estimated 10% commission for the accommodation entry and thereupon made a further addition ....
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....he view that upon reading the report given by the Income Tax Officer (which is not the same as reasons for issuing a notice), the Commissioner could not have come to the conclusion on the material before him that it is a fit case for issuance of a notice under Section 148 of the Act. 12. From the decision of the Supreme Court, it is clear that a mere statement of facts in the form of a report is not a substitute for reasons that are required to be recorded before issuing a notice under Section 148 of the Act. The Supreme Court also noted that substance cannot be substituted by form and it is in that context that the Supreme Court expressed the view that by merely saying "Yes", the Commissioner did not fulfill the duty cast upon him. 1....
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....47 of the Act is stronger than the expression "is satisfied". In other words, mere satisfaction of the Assessing Officer for the issuance of a notice is not enough "there must be reasons on record which have led him to believe that a notice should be issued. 16. In United Electrical Co. Pvt. Ltd. v. Commissioner of Income-tax, (2002) 258 ITR 317, this Court considered the entire issue afresh. It was observed that the expression "reason to believe" occurring in Section 147 of the Act is crucial. Reference was made to Bawa Abhai Singh v. Deputy Commissionerof Income Tax, (2002) 253 ITR 83 where in it was observed that "reason to believe" postulates a foundation based on information and a belief based on reasons. In so far as "information" ....