TaxTMI 
TaxTMI 
2025 (4) TMI 781
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....Income-tax Act, 1961 (hereinafter referred to as the "Act"). 2. The assessee in this appeal is aggrieved by the action of the Ld. CIT(A) in confirming the addition made by the AO of Rs. 50 lakh u/s. 68 of the Act treating the sale of shares by the assessee as bogus. In this case, the impugned addition was made by the AO in an assessment carried out u/s. 147/148 of the Act by way of reopening of the assessment. 3. The assessee in this appeal has challenged the impugned addition not only on merits but also on the legal ground that the reopening of the assessment in this case u/s. 147/148 of the Act was bad in law. 4. At the outset, the Ld. Counsel for the assessee has invited our attention to the opening lines of the assessment order dated....
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....from the Investigation Wing. That the satisfaction of the AO regarding escapement of the income of the assessee was a borrowed satisfaction. 6. The Ld. DR, on the other hand, has relied on the orders of the lower authorities. 7. We have considered the rival contentions and gone through the record. A perusal of the reasons recorded for reopening of the assessment would reveal that in this case, the only information received by the AO was that the assessee company was beneficiary of Rs. 50,00,000/- received as accommodation entry through layering of bank transactions in the Financial Year 2010-11. This information is a vague information. The AO did not co-relate and verify this information from the accounts of the assessee. There is no ment....
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....isfaction of the assessing authority. Such reason should be held in good faith and cannot merely be a pretence. The reasons to believe must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding escapement of income. The powers of Assessing Officer to reopen an assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The entire law as to what would constitute "reason to believe" has been summed up by the hon'ble Supreme Court in the case of "Income Tax Officer v Lakhmani....