TaxTMI 
TaxTMI 
2017 (1) TMI 779
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.... up ITA No.215/Kol/2016 for AY 2001-02. 3. The first issue raised by the assessee in this appeal is that ld. CIT(A) erred in confirming the order of AO by holding the assessment under section 147 of the Act as valid. 4. At the outset the ld. AR appearing for assessee has challenged the assessment proceedings u/s 147 of the Act on the ground that the conditions for initiating proceedings under the Act have not been complied with. The ld. AR before us submitted that proceedings under section were initiated on account of two reasons as discussed below : 1. The AO observed that the assessee has claimed exemption under section 11 of the Act without having valid registration under section 12A of the Act. 2. The AO also observed that the assessee has claimed personal expenses against the income of other sources which are not allowable under section 57 of the Act. However it was submitted that the trust is not registered under section 12A of the Act and consequently there is no question for claiming the exemption under section 11 of the Act. Therefore the observation of the AO for reopening the case u/s 147 of the Act that the assessee has claimed exemption u/s 1....
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....sult in detection of an income escaping assessment. Undoubtedly, at the stage of recording the reasons for reopening the assessment all that is necessary is the formation of prima facie belief that an income has escaped the assessment and it is not necessary that the fact of income having escaped assessment is proved to the hilt. What is, however, necessary is that there must be something which indicates, even if not establishes, the escapement of income from assessment. It is only on this basis that the Assessing Officer can form the belief that an income has escaped assessment. Merely because some further investigations have not been carried out, which, if made, could have led to detection to an income escaping assessment, cannot be reason enough to hold the view that income has escaped assessment. It is also important to bear in mind the subtle but important distinction between factors which indicate an income escaping the assessments and the factors which indicate a legitimate suspicion about income escaping the assessment. The former category consists of the facts which, if established to be correct, will have a cause and effect relationship with the income escaping the assess....
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....e-tax Appellate Tribunal has limited jurisdiction under section 254(2) of the Act. Thus when the Assessing Officer or Tribunal has considered the matter in detail and the view taken is a possible view the order cannot be changed by way of exercising the jurisdiction of rectification of mistake. It is a well settled principle of law that what cannot be done directly cannot be done indirectly. If the Income-tax Officer does not possess the power of review, he cannot be permitted to achieve the said object by taking recourse to initiating a proceeding of reassessment or by way of rectification of mistake. In a case of this nature the Revenue is not without remedy. Section 263 of the Act empowers the Commissioner to review an order which is prejudicial to the Revenue." In Bawa Abhai Singh"s case [2002] 253 ITR 83 (Delhi), a Division Bench of Hon'ble Delhi High court clearly held that : "The crucial expression is "reason to believe". The expression predicates that the Assessing Officer must hold a belief by the existence of reasons for holding such a belief. In other words, it contemplates existence of reasons on which the belief is founded and not merely a belief in the exi....
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....tional safeguard or condition that escapement of income was due to fault of the assessee, in not fully and truly disclosing the material facts at the time of original assessment. The Hon'ble Supreme Court endorsing the Full Bench decision of the Hon'ble Delhi High Court in CIT vs. Kelvinator of India Ltd. -held in its order reported in 320 ITR 561, ".....that Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have link with the formation of belief." Therefore, if the fresh tangible material which the AO has in his possession is relevant to have nexus to the formation of belief then, of course, the AO would have the necessary jurisdiction to take action under the Act. What is required to be examined is not the adequacy or sufficiency of the grounds but the existence of belief. In our view, all that one has to examine is that whether there was some material which, gave rise to prima facie view if that income has escaped assessment and the belief was formed in good faith or was it mere pretence for initiating action u/s 147/148 of the Act. 7. Now ....