TaxTMI 
TaxTMI 
2019 (8) TMI 1417
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....d 148 notice dated 29.03.2018 at Annexure-K and impugned order rejecting objection dated 22.11.2018 at Annexure-O. (ii) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay the reassessment proceedings pursuant to notice under section 148 dated 29.03.2018 at Annexure-K. (iii) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice, and (iv) This Hon'ble Court be pleased to allow this application with costs against the respondent." 4. The facts giving rise to this writ application may be summarized as under: 4.1 The writ applicant is an assessee. The assessee filed its return of income for the A.Y.2011-12, declaring the total income of Rs. 14,00,432/- on 30th March, 2013. The same was processed under Section 143(1) of the Income Tax Act, 1961 (for short " the Act, 1961") without any modification. 4.2 The case was selected for scrutiny assessment and a notice under Section 143(2) dated 12th August, 2013 was issued and served upon the assessee. The case was, thereafter, transferred to the office of the Income Tax Officer, Ward-2(....
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....nbsp; 2. Spectrum Stock Service Pvt. Ltd. 1, British Indian Street, 4th Floor, Room No.405, Kolkatta 18,00,0001 22.06.2010 19.03.2015 3. Nirlon Trade & Finance Pvt. Ltd. 29B, Rabindra Sarani, 3rd Floor, Room No.2E, Kolkatta 25,00,000 10/06/10 15.02.2013 25,00,000 10/06/10 15.02.2013 25,00,000 14.06.2010 19.02.2013 25,00,000 16.06.2010 4. Shri Sati Fivest Pvt. Ltd. 3, Amartolla Street, 1st Floor, Kolkatta- 700001 25,00,000 10/06/10 19.03.2013 25,00,000 25.01.2011 5. Ishan Tie Up Pvt. Ltd. 369/14, Dakshindari Road Narmada Appt, 4th Floor, Flat No.9, Kolkatta- 700048. 30,00,000 17.01.2011 13.03.2013 10,00,000 25.01.2011 3. During the investigation, it was also found that all the above companies have No credentials to carry out transaction of huge amounts as per their income profile. These Kolkatta based companies are indulged in providing accommodation entries in the form of unsecured loans. 4. On analysis of above fact, it can be construed that the assessee has taken accommodation entries from the above shell companies in the form of bogus....
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....nd there are number of judgments of various Court that the assessee is not expected to prove the source of source and hence no addition can be made u/s.68 of the I.T. Act. With reference to your notice dated 13.11.2018 we submit as under. A. The assessee is a construction contractor. B. We have already filed audit report and acknowledgment of ITR vide our letter dated 13.09.2013. C. We enclose herewith all bank statements. D. As already replied. E. Working of Capital Gain and Copy of Computation of Income is enclosed herewith." 4.8 Ultimately, an order came to be passed dated 22nd November, 2018, overruling the objections raised by the assessee against the issue of notice under Section 148 of the Act, 1961. The order reads thus: "The assessee filed its Return of income for A.Y. 2011-12 declaring total income of Rs. 14,00,432/- on 30.03.2013. The assessment u/s. 143(3) of the I.T. Act was finalized on 28.03.2014 accepting total income at Rs. 14,00,432/-. This office got in possession of information that the assessee has taken unsecured loan of Rs. 2,25,00,000/- from five shell companies situated in Kolkata during the year under consideration It was also found ....
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....ready filed our bank statement as well as bank statements of the lenders/depositors. Moreover, the depositor has directly filed their copy of IT Return. It proves that we have established the identity, capacity and genuineness of transactions took place between the assessee and the depositors. The basis for re-opening as stated in your recorded reasons is para-3 and 4 we would like to submit that we cannot be expected to prove the source of source and there are number of judgments of various Court that the assessee is not expected to prove the source of source and hence no addition can be made u/s.68 of the I.T. Act. 4. The objection raised-by the assessee has been duly considered, however, objections raised by the assessee are not found acceptable on the following reasons: (I) As additional facts and information has come on the records upon investigation and enquiries made which clearly establish that the lendor companies are shell companies and has no such creditworthiness to advance such amount of loan. These companies have given accommodation entries in the form of unsecured loans amounting to Rs. 2,25,00,000/-. Moreover, these companies have no financial credentials to c....
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....vestigation it was found that the said companies have no credentials to carry out transactions of huge amounts as per their income profile and, therefore, the Assessing Officer seeks to reopen the assessment on the ground that the above income has escaped assessment. 5.2 The learned counsel invited our attention to the notice dated 16.9.2013 issued by the Assessing Officer during the course of the scrutiny proceedings, to point out that the Assessing officer had called for complete details of the new unsecured loans/deposits taken and accounts squared up, in response to which, the writ applicant had furnished all the necessary details with regard to the loan taken from the five companies referred to in the reasons recorded. 5.3 It was pointed out that the confirmations from the said companies were furnished during the course of the scrutiny proceedings together with the copies of their bank statements. 5.4 It was submitted that the Assessing Officer after being satisfied with regard to the creditworthiness and genuineness of the said parties did not make any addition. It was pointed out that subsequent to the assessment order being passed, the Assessing Officer had also recei....
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.... all the materials facts. The reason must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the purpose of the section. 5.10 Mr. Gandhi also placed reliance on a decision of this Court in the case of Inductotherm (India) (P.) Ltd. vs. M. Gopalan, Deputy Commissioner of Income Tax, reported in (2013) 356 ITR 481. This decision has been relied upon by Mr. Gandhi to fortify his submission that even in case of reopening of an assessment which was previously accepted under Section 143(1) of the Act without scrutiny, the Assessing Officer would have the power to reopen the assessment provided he had some tangible material, on the basis of which, he could form a reason to believe that the income chargeable to tax had escaped assessment. According to Mr. Gandhi, the information furnished by the Investigation Wing would not constitute tangible material, on the basis of which, the Assessing Officer could form a reason to believe that the income chargeable to tax had escaped a....
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....ort of his submissions, has placed reliance on the following decisions: "(i) Calcutta Discount Company Limited vs. Income Tax Officer, Companies District, I & Ors., 41 ITR 191 (SC); (ii) Phool Chand Bajrang Lal & Ors. vs. Income Tax Officer & Ors., 203 ITR 456 (SC); (iii) Yogendrakumar Gupta vs. Income-Tax Officer, 366 ITR 186; (iv) Gujarat Power Corporation Ltd. vs. Assistant Commissioner of Income Tax, 350 ITR 266; 6.3 Mr. Bhatt also made available for our perusal the information in writing furnished by the Investigation Wing to the Assessing Officer. It appears that during the course of the investigation, it was found that all those companies said to have given unsecured loan to the writ applicant and which is shown to have been repaid by the writ applicant to the respective company, are all shell companies found to have been indulging in providing accommodation entries in the form of secured loans. The report further indicates that thousands of companies have been registered at one address situated at Calcutta. The Directors are all common in the multiple companies. The companies have no financial credential to carry out the transactions of huge amounts which was ....
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....o its amendment with effect from 1-4-1989, section 147 provided as follows :-- "147. Income escaping assessment. - If -- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." 11. The condition precedent to the exercise of the jurisdiction under section 147 is the formation of a reason to believe by the Assessin....
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....on, in Vipan Khanna v. Asstt. CIT [2002] 255 ITR 2201 dealt with the question as to whether, after initiating the proceedings under section 147 on the ground that the petitioner had claimed depreciation at a higher rate, the Assessing Officer would be justified in launching an inquiry into the issues which were not connected with the claim of depreciation. This question was answered in the negative. 15. A Division Bench of the Kerala High Court held in Travancore Cements Ltd. v. CIT [2008] 305 ITR 1701 , that upon the issuance of a notice under section 148(2), when the proceedings were initiated by the Assessing Officer on the issues in respect of which he had formed a reason to believe that the income had escaped assessment, it was not open to the Assessing Officer to carry out an assessment, or reassessment in respect of the other issues which were totally unconnected with the proceedings that were already initiated and which came to his knowledge during the course of the proceedings. The Division Bench held that in respect of an issue which is totally unconnected to the basis on which the Assessing Officer formed a reason to believe that income escaped assessment and issued a ....
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....r reopening the assessment and that it was not open to him to touch upon any other issue for which no reasons have been recorded. This interpretation was regarded by Parliament as being contrary to the legislative intent. Hence, Explanation 3 came to be inserted to provide that the Assessing Officer may assess or reassess the income in respect of any issue which comes to his notice subsequently in the course of the proceedings under section 147 though the reasons for such issue were not included in the reasons recorded in the notice under section 148(2). 18. The effect of section 147 as it now stands after the amendment of 2009 can, therefore, be summarised as follows : (i) The Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) Upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the Assessing Officer has to serve on the assessee a notice under sub-section (1) of section 148; (iii) The Assessing Officer may assess or reassess such income, which he has reason to believe, has escaped assessment and also any other income chargeable to tax which ....
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.... Jhaveri Stock Brokers P. Ltd., (supra) and several other decisions, such reason to believe need not necessarily be a firm final decision of the Assessing Officer." 20. In this context, it is also equally well settled that the term "reason to believe" is vitally different from "reason to suspect". We may recall, for a brief while, section 147 of the Act contained the expression "if the Assessing Officer for the reasons to be recorded by him in writing is of the opinion". However, it was soon realized that this expression "is of the opinion" would be too wide giving excessive powers to the Assessing Officer to resort to reopening of assessment. This expression was, therefore, quickly changed to bring back the expression "if the Assessing Officer has reason to believe". This aspect was highlighted by the Supreme Court in the case of Commissioner of Income Tax vs. Kelvinator of India Ltd. reported in 320 ITR 561. In context of section 147 of the Act post its amendment w.e.f. 01.04.1989, the Supreme Court held that Section 147 does not vest arbitrary power in the Assessing Officer and held that even post amendment of 01.04.1989 in section 147, concept of change of opinion would apply....
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...."7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression `reason to believe' in Section 147.--A number of representations were received against the omission of the words `reason to believe' from Section 147 and their substitution by the `opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression `has reason to believe' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." 21. The principle, that the notice of reopening can be issued only upon the Assessing Officer bona fide forming a belief that income chargeable to tax had escaped assessment is thus, well settled. Reassessment cannot be resorted to on mere suspicion or for carrying out fishing or roving inquiries....
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....yanappa v. Commissioner of Income- Tax, Bangalore, (1967) 63 ITR 219: [AIR 1967 SC 523], held that: "if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notice under S. 34. Whether these grounds are adequate or not is not a matter for the Court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression "reason to believe" in S. 34 of the Income-tax Act does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith: it cannot be merely a pretence. To put it differently it is open to the Court to examine the ques....
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....he I.-T.O acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or non-specific." "26... ...One of the purposes of S. 147, appears to us to be, to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say "you accepted my lie, now your hands are tied and you can do nothing." It would be travesty of justice to allow the assessee that latitude." (Emphasis supplied) 26. The Apex Court also had an occasion to deal with the amended provisions in Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Private Limited, (2008) 14 SCC 208;(2007) 291 ITR 500 . The Court found the scope and effect of section 147 to 148 as substituted with effect from April 1, 1989, to be substantially different from the earlier provisions. For conferment of jurisdiction under original section 147(a), two conditions required satisfaction (i) the Assessing Officer must have reason to bel....
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....uestion before the assessing authority lies on the assessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income-tax Officer might have discovered, the Legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account-books and the documents". His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment." Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been ....
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....nsequence of information he must have that reason to believe and it was submitted that the information was already there and there was no new information from which the Income-tax Officer could have formed the belief. Having regard to the facts of this case as discussed above and the nature of the information indicated before, we are of the opinion that there was information in the form of a revised return and since the information mentioned before came to the knowledge of the Income-tax Officer subsequent to the making of the first assessment and the information being such from which a reasonable person could have formed the belief that there was escapement of income or underassessment of income, it cannot be said that there was no jurisdiction of the Income-tax Officer to reopen the assessment. Whether in fact the reassessment to be made pursuant to the notice issued, the income assessed would be more by Re, 1/- or less than the income already assessed is not material or relevant for the question of jurisdiction to issue the notice under S. 147 of the Act." (Emphasis supplied) 32. The Supreme Court in Lakhmani Mewal Das (supra), had observed as under: "The grounds or reas....
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....oned, on account of either failure on the part of the assessee to make a return of his income for that assessment year, or to disclose fully and truly all material facts necessary for assessment of that year, or to disclose fully and truly all material facts necessary for assessment of that year; [ii] both the above conditions are conditions precedent and must be satisfied simultaneously before the Income-tax Officer can assume jurisdiction to reopen the assessment beyond four years of the end of the assessment year; [iii] such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening notice must fail; [iv] there is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Officer had reason to believe that certain income has escaped assessment and such escapement of income was on account of non filing of the return by the assessee or failure on his part of disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor absence o....
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.... basis of the information from the Investigation Wing are as follows: (I) PCIT v. Paramount Communication P. Ltd. (2017) 392 ITR 444 (Delhi)(HC); (ii) Aravali Infrapower Ltd. v. DCIT, (2017) 390 ITR 456 (Delhi)(HC) (iii) Aradhna Estate Pvt. Ltd. v. DCIT, (2018) 404 ITR 105 (Guj) (HC) (iv) Rajnish Jain. v. CIT (2018) 402 ITR 12 (All) (HC) 39. While it is true that the court is conscious that the reassessment notice should not have been routinely issued, at the same time, the nature of power is wide enough that when there is an escapement of income and the Revenue has information ruling that this escapement is also relatable to the suppression of material facts (which could include false claims), the power to reopen concluded assessment can validly be exercised. The consideration which ought to weigh with the Revenue and are considered valid are the existence of the tangible material or information in the light of the judgment in CIT vs. Kelvinator of India Ltd., (2010) 320 ITR 561 (SC). Having regard to the reasons assigned for reopening the assessment, we are unable to accept the vociferous submissions of Mr. Gandhi. It constitutes reference to tangible material "outs....
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.... Co. Ltd. vs. Income Tax Officer, Nagpur (Supra) the Supreme Court noted that in case of the assessee which had an office in London, this Customs authority had come to know that the assessee had declared very low price in respect of the consignment of Manganese exported by them out of India. After due inquiries and investigations, the Customs authorities found that the assessee was systematically undervoicing the value of Manganese as compared with the prevailing market price. The Income Tax Officer on coming to know about the proceedings before the Customs Collector in this respect issued notice for reopening of the assessment. In the reasons that the Assessing Officer relied on the facts as found by the Customs Authorities that the assessee had under-voiced goods during export. Under such circumstances, upholding the validity of the notice for reopening, the Supreme Court held and observed as under :- "So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding....
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....ssession information on the basis of which he could have reasons to believe that income of the assessee chargeable to tax had escaped assessment for the relevant assessment years. For the reasons aforementioned, we are unable to uphold the impugned judgment of the High Court. The appeal is, therefore, allowed, the impugned judgment of the High Court is set aside and the Writ Petitions filed by the respondents are dismissed. No order as to costs. 12. In case of Income Tax Officer vs Selected Dalurband Coal Co. Pvt. Ltd. (Supra), the assessment was reopened on the basis of the information contained in letter from Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of coal raised. Upholding the validity of re-opening of assessment, the Supreme Court held and observed as under :- "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the resp....
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....actions involving Rs. 27 lakhs mentioned in the table in Annexure P-2 constitute fresh information in respect of the assessee as a beneficiary of bogus accommodation entries provided to it and represents the undisclosed income. The assessing officer has referred to the subsequent information and adverted to the concept of true and full disclosure of facts. It is also noticeable that there was specific information received from the office of the DIT (INV-V) as regards the transactions entered into by the assessee company with number of concerns which had made accommodation entries and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of juri....
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....ed on the facts as found by the Customs Authorities that the assessee had under-voiced the goods during export. In such circumstances, while upholding the validity of the notice for reopening, the Supreme Court held and observed as under: "So far as the first condition is concerned, the Income Tax Officer, in his recorded reasons, has relied upon the fact as found by the Customs Authorities that the appellant had under invoiced the goods it exported. It is not doubt correct that the said finding may not be binding upon the income tax authorities but it can be a valid reason to believe that the chargeable income has been under assessed. The final outcome of the proceedings is not relevant. What is relevant is the existence of reasons to make the Income Tax Officer believe that there has been under assessment of the assessee's income for a particular year. We are satisfied that the first condition to invoke the jurisdiction of the Income Tax Officer under Section 147(a) of the Act was satisfied." 43. In the case of Income Tax Officer vs Purushottam Das Bangur, (1997) 224 ITR 0362 after completion of the assessment in the case of the assessee, the Assessing Officer received a....
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....ter from the Chief Mining Officer that the colliery of the assessee had been inspected and there had been under reporting of the coal raised. Upholding the validity of reopening of assessment, the Supreme Court held and observed as under: "After hearing the learned counsel for the parties at length, we are of the opinion that we cannot say that the letter aforesaid does not constitute relevant material or that on that basis, the Income Tax Officer could not have reasonably formed the requisite belief. The letter shows that a joint inspection was conducted in the colliery of the respondent on January 9,1967, by the officers of the Mining Department in the presence of the representatives of the assessee and according to the opinion of the officers of the Mining Department, there was under reporting of the raising figure to the extent indicated in the said letter. The report is made by a Government Department and that too after conducting a joint inspection. It gives a reasonably specific estimate of the excessive coal mining said to have been done by the respondent over and above the figure disclosed by it in its returns. Whether the facts stated in the letter are true or not is n....
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....ies and they were not genuine transactions. As we perceive, it is neither a change of opinion nor does it convey a particular interpretation of a specific provision which was done in a particular manner in the original assessment and sought to be done in a different manner in the proceeding under Section 147 of the Act. The reason to believe has been appropriately understood by the assessing officer and there is material on the basis of which the notice was issued. As has been held in Phool Chand Bajrang Lal (supra), Bombay Pharma Products (supra) and Anant Kumar Saharia (supra), the Court, in exercise of jurisdiction under Article 226 of the Constitution of India pertaining to sufficiency of reasons for formation of the belief, cannot interfere. The same is not to be judged at that stage. In SFIL Stock Broking Ltd. (supra), the bench has interfered as it was not discernible whether the assessing officer had applied his mind to the information and independently arrived at a belief on the basis of material which he had before him that the income had escaped assessment. In our considered opinion, the decision rendered therein is not applicable to the factual matrix in the case at han....
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....resh facts come to light which were not previously disclosed, or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but is is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look the conclusion arrived at by the Income tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by him and further whether that material had any rational connection or a live link with the formation of the requisite belief. In the instant case also, these observations and findings would have a direct bearing. The Assessing Officer, at the time of making original ass....
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.... be guided by the reasons recorded for the reassessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of reassessment. To put it in other words, having regard to the entire scheme and the purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer is not authorized to refer to any other reason even if it can be otherwise inferred or gathered from the records. The Assessing Officer is confined to the recorded reasons to support the assumption of jurisdiction. He cannot record only some of the reasons and keep the others upto his sleeves to be disclosed before the Court if his action is ever challenged in a court of law. (ii) At the time of the commencement of the reassessment proceedings, the Assessing Officer has to see whether there is prima facie material, on the basis of which, the department would be justified in reopening the case. The sufficiency or correctness of the material is not a thing to be considered at that stage. (iii) The validity of the reopening of the asse....
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.... quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. (xi) While the report of the Investigation Wing might constitute the material, on the basis of which, the Assessing Officer forms the reasons to believe, the process of arriving at such satisfaction should not be a mere repetition of the report of the investigation. The reasons to believe must demonstrate some link between the tangible material and the formation of the belief or the reason to believe that the income has escaped assessment. (xii) Merely because certain materials which is otherwise tangible and enables the Assessing Officer to form a belief that the income chargeable to tax has escaped assessment, formed part of the original assessment record, per se would not bar the Assessing Officer from reopening the assessment on the basis of such material. The expression "tangible material" does not mean the material alien to the original record. (xiii) The order, disposing of objections or any counter affidavit filed during the writ proceedings before the Court cannot be substituted for the "reasons to believe. (xiv) The decision to reopen the assess....
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.... matter bearing on the assessment. An information anonymous is information from unknown authorship but nonetheless in a given case, it may constitute information and not less an information though anonymous. This is now a recognized and accepted source for detection of large scale tax evasion. The non-disclosure of the source of the information, by itself, may not reduce the credibility of the information. There may be good and substantial reasons for such anonymous disclosure, but the real thing to be looked into is the nature of the information disclosed, whether it is a mere gossip, suspicion or rumour. If it is none of these, but a discovery of fresh facts or of new and important matters not present at the time of the assessment, which appears to be credible to an honest and rational mind leading to a scrutiny of facts indicating incorrect allowance of the expense, such disclosure would constitute information as contemplated in clause (b) of Section 147. (xx) The reasons recorded or the material available on record must have nexus to the subjective opinion formed by the A.O. regarding the escapement of the income but then, while recording the reasons for the belief formed, t....