TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1537
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....er of Ld.CIT(A), it is seen that Ld.CIT(A) while allowing the appeal of the assessee has annulled the assessment order by holding the re-assessment proceedings as invalid and thus, the same deserves to be dismissed. 4. On the contrary, Ld. Sr. DR stated that in the grounds, Revenue has taken general grounds that the order of Ld.CIT(A) be cancelled and the order of AO be restored which is against the action of Ld.CIT(A) in accepting the appeal on the validity of the re-assessment proceedings therefore, he requested accordingly. 5. We have heard the rival contentions and perused the material available on record. After considering the submissions and perusing from the order of Ld.CIT(A), we find that in the instant case, Ld.CIT(A) has held the reassessment proceedings as invalid by observing that the case of the assessee is re-opened after a period of four years without any tangible material and such observations of Ld.CIT(A) are not challenged by the Revenue in the appeal. The relevant observation of Ld.CIT(A) are as below:- "........During the course of appeal before me, it is informed by the counsel of the appellant that this disallowance of rent paid to Smt. Nirmala Singh trav....
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....t. Since the assessee had shown excess of income over expenditure of Rs. 1,66,04,893/- therefore AO formed reasons to believe that a sum of Rs. 1,66,52,893/- representing undisclosed transaction (s) has escaped taxation for assessment year 2007-08. After the change in the incumbent of the office these reasons were formulated that is nothing but amounts to change of opinion. It is noteworthy that the AO has nowhere observed that the assessee had not disclosed at the original assessment stage all the facts involved in the issues made basis for reopening the completed assessment. During the course of appeal before me, it is informed by the counsel of the appellant that this disallowance of rent paid to Smt. Nirmala Singh travelled up to the level of High Court for the AY 2005-06 which is purely a question of fact. But whether this fact holds good for this year or not cannot be decided on the basis of surmises and conjectures. The AO has not come into possession of any new information or evidence to find that no activity related to society was carried out from this premise during the financial year under consideration. It is argued that merely on the basis of facts pertaining to earl....
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.... AO, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. If the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessed should be made to suffer the consequences of that lapse. Before issuing any notice U/S 148 the assessing officer must have reason to believe that any income chargeable to tax has escaped assessment. Reason to believe cannot be a reason to suspect merely. There must be a direct nexus between the material coming to the notice of the assessing officer and the formation of the belief that there has been escapement of income of the assessee from assessment in a particular year. The material for formation of belief must be relevant and not vague. In the case under consideration there is no new material that came into the possession of AO to form the required belief. All the facts that have been used by the AO to form belief for reopening the completed assessment u/ 143(3) of the Act, were duly disclosed by the assessee in its original return of income and further during the original assessment proceedings u/s 143(3) in reply to specif....
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....e was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. The Supreme Court has reaffirmed the principle in ITO v. Habibullah, [1962] 44 ITR 809 SC HELD: there should be some "tangible material" coming into the possession of the AO in such cases to enable him to resort to section 147. Despite being a case of full and true disclosure, tangible material coming to the possession of the AO after he made the original assessment under section 143(3), would influence the opinion, formed or presumed to have been formed earlier, of the assessing authority; he can with justification change it, but that would not be a case of a "mere change of opinion" unguided by new facts or change in the legal position. It will be a case of the assessing authority having "reason to believe", notwithstanding that full and true particulars were furnished by the assessee which were examined, or presumed to be examined, by him. It is not a case of an assessee who ha....