TaxTMI 
TaxTMI 
2018 (11) TMI 1315
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....291 ITR 500 wherein it was stated that the word "reason" in the phrase "reason to believe" would mean cause or justif ication to know or suppose that income had escaped assessment and the expression cannot mean that the AO should have f inally ascertained the f act, legal evidence or conclusion and the f inal outcome of the proceedings is not relevant?" 3. "Whether on the facts and in the circumstances of the case and in law, the Id CIT(A) is correct in holding that the reopening of assessment is bad in law without appreciating that no regular scrutiny u/s.143(3) was made in the case and theref ore the requirement to prove f ailure on the part of the assessee to disclose all material f acts/change of opinion does not apply to the assessee's case?" 4. "Whether on the facts and in the circumstances of the case and in law, the Id CIT(A) erred in relying upon the decision of the ITAT which is applicable to the cases where the original assessment was made u/s 143(3) whereas in this case the no such original assessment was made u/s 143(3)? 5. "Whether on the facts and in the circumstances of the case and in law, the Id CIT(A) is justif ied in holding that the reopening of asses....
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.... conducted investigations and it came to light that Shri B. Ramalinga Raju and his brothers (assessee being one of them) and their family members have floated numerous front companies for the purpose of routing the funds and to acquire vast tracts of land in and around Hyderabad. Since the assessee is also a co-accused in the Satyam scam as per the charge sheet filed by CBI on 07.04.2009, the A.O issued a notice u/s 148 of the IT Act and in response to the notice, the assessee filed his return of income on 27.03.2012 declaring income of Rs. 40,63,020/-. The assessee also filed his objections for reopening the assessment. The A.O, however, rejected the objections of the assessee and recomputed the income of the assessee at Rs. 89,70,973/- making certain disallowances and additions. Aggrieved, the assessee filed an appeal before the CIT(A) challenging both the reopening of the assessment as well on the merits of the additions. 4. The CIT(A), by following the ITAT order in the cases of the assessee's Group Companies, held that the reopening u/s 147 of the IT Act is invalid as the AO has not established the nexus between the assessee & M/s SCSL and that there is no nexus between the r....
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.... belief that there was escapement of income "on going through the return of income" f iled by the assessee af ter he accepted the return under section 143(1) without scrutiny, and nothing more. This was nothing but a review of the earlier proceedings and an abuse of power by the A.O. the reasons recorded by the A.O did conf irm the apprehension about the harm that a less strict interpretation of the words "reason to belief " vis-à-vis an intimation issued under section 143(1) could cause to the tax regime. There was nothing in the reasons recorded to show that any tangible material had come into the possession of the A.O subsequent to the issue of the intimation. The notice ref lected an arbitrary exercise of the power conferred under section 147". The Hon'ble Gujarat High Court in the case of Ratna Trayi Reality Service Pvt Ltd., Vs. ITO has held as under: "Having thus heard learned counsel for the parties and having perused the documents on record, we need to examine the validity of the notice f or reopening, in the context of reasons recorded, of course, bearing in mind that, in the present case, previously, no scrutiny assessment was f ramed. It is of course true th....
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....pening of an assessment, the Assessing Off icer cannot try to scrutinize the return. This aspect substantially overlaps with the later contention of the petitioner that the reasons recorded by the Assessing Off icer were not germane and were not suff icient to permit reopening. It would, thus, emerge that even in case of reopening of an assessment which was previously accepted under section 143(1) of the Act without scrutiny, the Assessing Off icer would have power to reopen the assessment, provided he had some tangible material on the basis of which he could f orm a reason to believe that income chargeable to tax had escaped assessment. However, as held by the Apex Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (supra) and several other decisions, such reason to believe need not necessarily be a f irm f inal decision of the Assessing Off icer. If we accept such proposition, the petitioner's apprehension that the Assessing Off icer would arbitrarily exercise powers under section 147 of the Act to circumvent the scrutiny proceedings which could not be framed in view of notice under section 143(2) having become time barred, ....