1980 (1) TMI 85

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....s. After enquiry, the ITO accepted its case and allowed deduction of interest. Subsequently, the ITO received information from the ITO, Hundi Circle, Bombay, that there was a regular racket there, whereby certain persons lent their names and did not advance any money. Having reason to believe that the hundi loans claimed by the assessee were bogus, he reopened the assessment by issuing a notice under s. 148 by applying s. 147, cl. (a), of the I.T. Act. The assessee appeared and took up the plea that the reopening was based on mere change of opinion and that the ITO had no material in his possession on the basis of which he could form the requisite opinion. The plea was repelled and since the assessee failed to prove the genuineness of th....

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.... of facts, held that this information was sufficient to lead the ITO to have reason to believe that income had escaped assessment. This belief was based on direct external evidence. It was not a case of change of opinion. It is noticeable that the entire information received by the ITO, Bombay, was general in nature. The statements made by the three bankers were equally general. There is nothing to indicate that those bankers referred to the assessee as one of the persons to whom they had lent their names. They did not state that the actual loan, shown by the assessee as having been advanced by them, was not taken from them. In the third place the statement did not specify the period during which the lending had been carried on. In other....

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....e confession was particularised with reference to time, which aspect was wanting in the Supreme Court decision. The Division Bench observed that in Lakhmani Mewal Das's case [1976] 103 ITR 437 (SC), it was the cumulative effect of all the aforesaid three circumstances that led the Supreme Court to hold that the confession was too vague and indefinite. But in Phool Chand Bajrang Lal's case [1977] 110 ITR 834 (All), the confession was held to be sufficiently particularised. Phool Chand Bajrang Lal's case is distinguishable from the present case. In the present case, all the three circumstances which led the Supreme Court to hold that the confession was too vague and indefinite are present. The statements made by the bankers at Bombay did not ....