TaxTMI 
TaxTMI 
2024 (7) TMI 1489
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....of the Income Tax Act, 1961 ['Act']. The issuance of a Show Cause Notice under Section 148A(b) of the Act dated 04 March 2023 is not disputed by the petitioner. The reassessment proceedings have come to be initiated pursuant to the material gathered with respect to Shri Dinesh Chand (Proprietor of M/s Manvee Traders) and the allegation that the firms of the aforenoted person were used for the purposes of generation of false invoices and in order for various beneficiaries, including the petitioner to avail of Input Tax Credit ['ITC']. 2. From a reading of the order ultimately passed under Section 148A(d) of the Act, we find that while considering the objections which were raised, the Assessing Officer has found as under:- '6. In ....
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.... * As per note 19 of notes to balance sheet there are purchases of Rs. 16,72,674. However assesse has not provided the details of parties from whom these purchases have been made. Further there are no sales made during the period. Therefore purchases are being made but revenues are not being booked indicating that these purchases are bogus. No explanation is provided as to why there is a huge addition to stock and why stock is not converted to sales. * Further, from the information available with this office, M/s Fortune Graphics Ltd (PAN: AAACF1861B) has reported total Purchases of Rs. 48,80,48,040/- under GSTR-1 with the assessee, M/s Kordient Ventures Private Limited. Therefore, the contention of assesse is not acceptab....
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....of the order dated 16 March 2023 issued under Section 148A(d) of the Act, the Assessing Officer has taken into consideration facts which would clearly be germane for the purposes of examining whether there was material to suggest that income of the petitioner had escaped assessment. 6. We take note of the following principles which would govern a challenge to the initiation of reassessment proceedings in Article 226 of the Constitution as laid down in Experion Developers P. Ltd v. Assistant Commissioner of Income Tax & Ors [2020 SCC Online Del 2588] and Synfonia Tradelinks Pvt. Ltd v. Income-tax Officer & Anr [2021 SCC Online Del 2692] 'Experion Developers P. Ltd v. Assistant Commissioner of Income Tax & Ors 20. In the light ....
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....aped assessment. 23. There are several judgments of the Supreme Court and of the High Courts which have extensively deliberated on the construction of the expression "reason to believe" (Ref : G. S. Engineering and Construction Corporation v. Deputy DIT (International Taxation) (2013) 357 ITR 335 (Delhi)). The scope of judicial review under article 226 of the Constitution of India has also now been well recognized. In a nutshell, the courts have applied the test of reasonableness, holding that the recorded reasons to believe must suggest and disclose that the belief is that of an honest and reasonable person, based on reasonable grounds. The discretion vested under the scheme of the Act has also prompted the courts to put a caution....
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.... "reason to believe" which is found in section 147 of the Act does not have the same connotation as "reason to suspect". The order recording reasons should fill this chasm. The material brought to the knowledge of the Assessing Officer should have nexus with the formation of belief that the taxable income of the assessee escaped assessment; the link being the reasons recorded, in that behalf, by the Assessing Officer. (iii) The Assessing Officer is mandatorily obliged to record reasons before issuing notice to the assessee under section 148(1) of the Act. This is evident from the bare perusal of sub-section (2) of section 148 of the Act. (iv) No notice can be issued under section 148 of the Act by the Assessing Officer aft....