TaxTMI 
TaxTMI 
2025 (7) TMI 1758
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....ling the proceedings initiated under Section 147 of the Income Tax Act. It raises similar questions of law and are therefore taken up together for hearing and disposal. 2. In W.P(C) No. 7101/2017; W.P(C) No. 7102/2017; W.P(C) No. 7103/2017 and W.P.(C) No. 7104/2017, the petitioners put into challenge the recording of reasons for issuance of notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), the notice under Section 148 of the Act, the Notice under Sub-Section 2 of Section 143 dated 23.05.2017 as well as the notices under Sub-Section 1 of Section 142 dated 23.05.2017 and 31.10.2017. 3. In W.P(C) No. 7482/2017, the petitioner is a private limited company. The company has submitted its return of income for the assessment years 2010-11 on 14.10.2010 showing total income at Rs. NIL. Subsequently, respondent No. 1 re-opened the case of the writ petitioner under Section 148 of the Income Tax Act, 1961 by issuing of notice dated 31.03.2017 under Section 148 of the Act. In response to the Notice under Section 148 of the Act, the petitioner submitted its return of income on 09.08.2017 and thereafter vide its letter dated 10.08.2017 applied to t....
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....epting the income disclosing the return. Thereafter on 31.03.2017 a notice under Section 148(1) was issued by the respondent No. 1 to the petitioner No. 1 to assess/re-assess its income for the assessment year 2010-11 on the ground that she had reasons to believe that income had escaped assessment within the meaning of Section 147. The petitioner No. 1 thereafter as per procedure prescribed submitted a return on 27.04.2017 which was identical in respect of the earlier returns dated 04.03.2011 and 08.09.2014. Thereafter, the petitioner applied for a certified copy of the reasons recorded. The reasons were thereafter supplied to the petitioner which however did not indicate the date it was recorded on. 7. It is contended on behalf of the petitioners that the respondent No. 1 made a statement that information was available to the assessing officer that the petitioner No. 1 had raised share capital of Rs. 1,51,00,000.00. It was further mentioned in the reasons that this information was received from the DIT(Investigation), Kolkata that most of the allottee companies were paper companies without any genuine business. In the reasons, it was mentioned that most of the companies were ow....
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....This had not been done. The essential materials to link the reasons with belief arrived at by the assessing officer is absent. "Narendra Kumar Jain" referred to in the reasons recorded in whose case survey was conducted on 11.04.2014 is a stranger. No case has been made out that he provided any accommodation entry to the petitioner. In the reasons recorded also there is no such statement attributed to Narendra Kumar Jain where he has stated that he provided any accommodation entry to the petitioner company. His statement was not recorded in connection with the petitioner company's case. Any information received from the Investigation wing/valuation officer or from any other source, per se cannot be said to be a "tangible material" for reopening of a case in the absence of any enquiry conducted by the assessing officer to verify its correctness, relevance or otherwise its link to the alleged escapement of income. In the Instant case the reasons do not disclose that after receipt of information any such enquiry was conducted by the assessing officer. The assessing officer merely accepted the vague information in a mechanical manner without application of his mind. 10. The learned ....
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.... petitioner's objections dated 09-10-2017 on the reasons recorded by the assessing officer (Annexure "16"), the assessing officer in her order dated 24-10-2017 (Annexure "17") has introduced certain new facts, which were not there in the reasons recorded by the assessing officer. It is submitted that it is a settled law that in the event of challenge to the jurisdiction to issue notice under Section 148 of the Act on the basis of reasons recorded by an assessing officer, the reasons are required to be read as these are recorded and no addition/substitution/deletion are permissible to such reasons. Therefore, introduction of new facts by the assessing officer was not permissible as per settled law. Further, while rejecting the objections of the petitioner vide her order dated 24.10.2017, the assessing officer has referred to the provisions of Explanation 2(ca) to Section 147 and has stated that in the instant case, information has been received from the Directorate of Investigation that the petitioner company has raised share capital with the allotment on 31.03.2010 to the tune of Rs. 1,51,00,000/- with the face value of Rs. 10/- and premium of Rs. 90/-. 13. Referring to Expl....
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....ed on materials available on record. In support of his contentions, the learned counsel for the petitioner refers to the judgment rendered by the following Judgments: 1. Guwahati Metropolitan Development Authority Vs. C.I.T, reported in (2017) 390 ITR 137 (Gauhati); 2. Hindustan Lever Ltd. Vs. R.B. Wadkar, A.C.I.T, reported in (2004) 268 ITR 332(Bombay); 3. Assam Co. Ltd. Vs. Union of India, reported in (2005) 275 ITR 609 (Gauhati); 4. I.T.O. Vs. Madnani Engineering Works Ltd. reported in (1979) 118 ITR 1 (SC) and 5. Northern Exim Pvt. Ltd. Vs. D.C.I.T., reported in (2013) 357 ITR 586 (Delhi) 15. The second limb of argument made by the learned counsel for the petitioner is that the term "reason to believe" suggests that the belief must be that of an honest and reasonable person, based on reasonable grounds and though the Assessing Officer may act on direct or substantial evidence, but he cannot act on mere suspicion, gossip or rumor. It is submitted that the grounds or reasons, which led to the formation of belief as contemplated by Section 147 of the Act of 1961 must have a material bearing on the question of escapement of income of ....
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....erial facts necessary for the assessment for that year, then the Assessing Officer must state so in the reasons recorded as to what was the material fact that was not disclosed by the assessee and the action should be founded on such reasons. In support of his contentions, the learned counsel for the petitioner has relied upon the Judgments rendered in ACIT Vs. CEAT Ltd, reported in (2022) 449 ITR 171 (SC); CIT Vs. Sonitpur Solvex Ltd., reported in (2013) 352 ITR 305 (Gauhati); Cedric De Soouza Faria Vs. DCIT, reported in (2018) 400 ITR 30 (Bombay); Usha Exports Vs. ACIT, reported in (2020) 312 CTR 237 (Bombay); Fenner India Ltd. Vs. DCIT, reported in (2000) 241 ITR 672 (Madras); Haryana Acrylic Manufacturing Vs. CIT, reported in (2009) 308 ITR 38 (Delhi) and SABH Infrastructure Ltd. Vs. ACIT, reported in (2017) 398 ITR 198 (Delhi). 18. The fifth limb of argument raised by the learned counsel for the petitioner is that the duty cast on the assessee is only to make full and true disclosure of all primary facts. It is not for him to tell the Assessing Officer what inferences, whether of facts or law should be drawn by the Assessing Officer. To refer the meaning "true and full disc....
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....e exercising powers under Section 147. In support of his contentions, he has pressed into service the Judgment of Assam Co. Ltd Vs. Union of India (Supra). 21. The further proposition raised by the learned counsel for the petitioner is that the power to re-open a case under Section 147 of the Act, there must "tangible material" to come to the conclusion that there was escapement of income from the assessment. In support of the contention, the learned counsel for the petitioner refers to the Judgment of Kelvinator of India Ltd (Supra) and Guwahati Metropolitan Development Authority (Supra). 22. It is further submitted that the writ petition is maintainable against a Notice issued under Section 148 of the Income Tax Act. Notwithstanding the plea of alternative remedy, a writ petition is maintainable to question a notice issued under Section 148 to re-open the assessment in the absence of tangible and cogent materials leading to atleast a prima facie view that income of the assessee had escaped assessment. It is submitted that the Judgment of the Apex Court rendered in Calcutta Discount Co. Ltd (Supra) which had laid down the proposition is still holding its field and has not be....
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....27.04.2017 for the assessment year 2010-11 showing total income at Rs. 1,64,62,050 and the tax payable on it at Rs. 59,80,122 and consequent to a search and seizure operation conducted in the case, assessee company had filed return under section 153(A) vide acknowledgement No. 345082611040914 dated 04.09.2014 declaring total income at Rs. 1,64,62.050/- and tax payable thereon was shown as Rs. 65,76,379/- and accordingly assessment under section 143(3) read with section 153(A) was completed on 31.03,2015 determining total income at Rs. 2,61,17,250/- 25. Mr. Keyal further submits that the notice under section 148 issued to the writ petitioner on 31.3.2017 for the assessment year 2010-11 based on reason to believe that income chargeable to the tax has escaped assessment within the meaning of section 147 of the Income Tax Act 1961. 26. It is further submitted by the learned Standing Counsel that the return of income filed on 24.07.2017 in response to the notice under section 148 of Income Tax Act was identical in all respect with the aforesaid revised return filed on 04.09.2014 since the return filed by the assessee company in response to the section 148 proves that the writ peti....
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....involve in 'jamakharchi'/ accommodation purpose not for any other work. It is submitted that income chargeable to tax which has escaped assessment exceeds Rs. 1 lakh and the assessment year falls within the time limit of 6 years. Therefore notice under section 148 was validly issued after taking prior approval of the jurisdictional commissioner of income tax. An independent enquiry is not required for formation of a reason to believe, enquiry is to follow during the course of assessment proceedings, reason to believe was formed on the objective satisfaction of assessing officer based on specific information received from DDIT(Inv), unit-2(2), working under DIT(Inv), Guwahati, which forms prescribed authority under section 133C of the Act. 30. Mr. Keyal further submits that the writ petitioner has already filed return in response under section 148 of the act and participate in the assessment under section 147 in the act. The writ petition is not maintainable on the ground that the writ petitioner has alternative remedy by way of filing appeal against assessment order. It is submitted that the notification relied by the writ petitioner is not applicable in the instant case as the ....
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....ing of information or documents and making available the outcome of the processing to the Assessing Officer. [Inserted vide Finance Act, 2017 w.e.f. 01.04.2017] Explanation. In this section, the term "proceeding" shall have the meaning assigned to it in clause (b) of the Explanation to section 133A. Income escaping assessment. 147. If the Assessing Officer has reason to believe that any 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 and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years fro....
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....lowance or any other allowance under this Act has been computed; [(ca) where a return of income has not been furnished by the assessee or a return of income has been furnished by him and on the basis of information or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;] (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it ....
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....tice. Explanation. For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. 149. Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped as....
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.... Thereafter a search and seizure operation under Section 132 was conducted in respect of the petitioner from 11.07.2012 to 03.09.2012 and the petitioner thereafter submitted its return of income on 08.09.2014 as per provision 153C read with Section 153A. Subsequently, a detailed scrutiny assessment order was passed by the respondent No. 1 on 31.03.2015 under Section 153C/143(3) of the Income Tax Act. After the assessment, the gross total income and total income assessed at NIL by the concerned assessing officer. 34. From the Assessment order, it is seen that the said assessment order was passed on verification and examination of the seized materials and the order was passed with the prior approval of the Addl. Commissioner of Income Tax, Range-IV. Thereafter notice dated 31.03.2017 under Section 148 of the Income Tax Act, 1961 for the assessment year 2010-11 was issued by the respondent No. 1 putting the petitioner to notice that there are reasons to believe that the income chargeable to tax have escaped assessment within the meaning of Section 147. Pursuant to this notice, the petitioner as per the provisions of the statute filed its returns showing NIL taxes. Subsequent theret....
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.... no genuine business of their own. As per the data made available by the DIT(Inv), Kolkata, most of these companies belonged to Shri Narendra Kr. Jain. Shri Jain during the course of survey conducted on 11.04.2014 had sworn under oath that he is an accommodation entry provider which provides bogus accommodation entries, bogus unsecured loan etc. As such the Assessing Officer had recorded reason to believe that the assessee's income of Rs. 1,51,00,000/- is chargeable to tax for the financial year 2009-10 which is relevant to the assessment year 2010-11 and the same had escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961 and that it was a fit case for issuance of notice under Section 148 of the Income Tax Act, 1961. The reasons also revealed that since the case is beyond four years, approval for issuance of notice under Section 148 is sought for from the Pr. CIT, Guwahati-2, Guwahati through proper channel. 36. Upon receipt of the grounds for issuance of notice under Section 147, the petitioner assessee filed a detailed objection. Thereafter, by order dated 24.10.2017, the Assessing Officer rejected the objections raised and concluded that the proceedi....
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....d have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an in-built idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore. Co. Ltd. V. ITO [1991]191 ITR 662, for initiation of action u/s. 147(a) (as the provision stood at the relevant time.), fulfilment of two requisite condition in that regard is essential. The final outcome of the proceedings was not relevant. What was relevant was the existence of reasons to make the ITO believe that there had been under-assessment of the assessee's income for a particular year. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. ITO v. Selected Dalurband Coal Co. (P.) Ltd.[1996]217 ITR597 (SC); Raymond Woollen Mills Ltd. v. IT0[1999]236 ITR 34 (SC). ....
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....lottee companies belong to well known entry operator of Kolkata, Sri. Narendra kumar Jain who had sworn under oath that he is an accommodation entry provider who provides bogus accommodation entries, bogus unsecured loans etc in lieu of cash commission Therefore, proceedings u/s 147 was validly initiated and as per provisions of the I.T. Act 1961." 38. As such the only ground for re-opening of the assessments and initiation of proceedings under Section 147 is the data received from the DIT(Inv), Kolkata. 39. Perusal of the pleadings reveal that the Assessing Officer by Communication No. F.No. AAFCM4378R/DCIT/C-4/GHY/2017-18/1794 dated 30.10.2017 (Annexure-19) had sought for several documents. For the purposes of deciding this issue, this communication is relevant and therefore the contents of the communication is extracted below: "GOVERNMENT OF INDIA MINISTRY OF FINANCE: DEPARTMENT OF REVENUE OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4, GUWAHATI Aayakar Bhawan, 502, Fifth Floor, G.S. Road, Guwahati F.No. AAFCM4378R/DCIT/C-4/GHY/2017-18/1794 Dated 30.10.2017 To M/S Mukund Infrastructure Pvt. Ltd. Royal Arcad....
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....er of allotment. d) Amount received in- (i) Face value (ii) Share premium per company e) Give details of mode of transaction-whether through bank or by cash along with documentary evidence." 41. Pursuant to the said communication, the petitioner sought for adjournment by Email dated 10.11.2017 a copy of which was also sent by post. However, there is no averment found in the writ petition as to whether these information as sought for by the Assessing Officer were furnished. 42. As discussed above in the forgoing paragraphs, the materials available before the Assessing Officer for re-opening the assessments as is evident from the grounds furnished to the assessee is that the petitioner assessee company had raised share capital with allotment on 31.03.2010 to the tune of Rs. 1,51,00,000/- with face value of Rs. 10/- and premium of Rs. 90/- and most of the allottee companies with regard to the capital raised for that particular assessment year are paper companies which exists only on paper with no genuine business of their own and most of these allottee companies belonged to one Shri Narendra Kr. Jain who is well known accommodation entry opera....
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...."147. Income escaping assessment.-If the assessing officer, for reasons to be recorded by him in writing, is of the opinion that any 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 and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as "the relevant assessment year")." 45. From the above, it is seen that prior to its amendment, the Assessing Officer was required to have the reason to believe that by omission or failure on the part of an assessee to file returns under Section 139 for the relevant assessment year or having filed failed to disclose fully and truly all material facts necessary for such assessment that the Income Tax Officer had reasons to believe that income chargeable to tax had escaped assessment for the relevant assessment year pursuant to info....
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....wn by this Court in Guwahati Metropolitan Development Authority (Supra) and the other Judgments pressed that the reasons must be recorded. The reasons having been recorded in the present proceedings and in that view of the matter no further discussions are required in respect of the first proposition urged by the assessee writ petitioner. 49. The 2nd and 3rd propositions urged are that "reason to believe" must be the belief of an honest and reasonable person, based on reasons though the Assessing Officer may act on direct or substantial evidence, but it cannot be on the basis of mere suspicion, gossip or rumor. The reasons to believe do not mean purely subjective satisfaction of the Assessing Officer. In this context, it is again necessary to refer to the amendments brought in to the Section 147 after 01.04.1989. Pursuant to the said amendment brought, the only ground for proceeding for re-opening of an assessment is that Assessing Officer has reasons to believe that any income chargeable to tax has escaped assessment for any assessment year. In the present proceedings, the information available with the Assessing Officer is the data made available from the Director of Investiga....
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....1989, the Assessing Officer can re-open the assessments if the Assessing Officer has the reason to believe that income chargeable to tax has escaped assessment for any assessment year. It has to be held that pursuant to the amendment brought into Section 147 and the powers of the Assessing Officer being widened by the statute, it is evident that the Assessing Officer can proceed under Section 147 if he has reasons to believe which are recorded in writing and which are furnished to the assessee on such demand made. 52. From the materials placed before the Court the reasons recorded by the Assessing Officer are on the basis of the data available from the Director of Investigation, Kolkata that for the relevant previous year to the corresponding assessment year, the petitioner assessee company has raised an amount of Rs. 1,51,00,000/- as share capital by allotment of shares to some bogus companies. These bogus companies as per the Date furnished by the DIT, Kolkata are found to be only inexistence in paper and the investigation has been carried on the basis of the statements recorded on oath by One Shri Narendra Kr. Jain who stated on oath that he is an accommodation provider who p....
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....00/- which was alleged to have been raised a share capital by allotment to some bogus companies is not correct. The reply does not reveal that any reference to any such material have been referred to or relied upon by the assessee questioning the correctness of the grounds leading to the reasons to believe for initiating proceedings under Section 147. Even in the present writ petition, no materials have been placed before this Court nor any averments are made in the writ petition to justify the contentions of the assessee writ petitioner that atleast prima facie the recording of the grounds for the reasons to believe by the assessing officer are incorrect on facts and/or on the records. Under such circumstances, these arguments made by the petitioner will have to be rejected. 55. The contention raised by the petitioner to the effect that whatever materials were furnished or filed by the petitioners and the same having been accepted by the assessing officer unless there are strong grounds to suspect that income has escaped relating to the relevant assessment year, there is no scope for the respondent to proceed for initiation of the proceedings under Section 147. It is urged befo....
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....nowledge. The expression "information" means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or having a bearing on the assessment. We agree that a mere change of opinion or having second thought about it by the competent authority on the same set of facts and materials on the record does not constitute "information" for the purposes of the State Act. But the word "information" used in the aforesaid section is of the widest amplitude and should not be construed narrowly. It comprehends not only variety of factors including information from external sources of any kind but also the discovery of new facts or information available in the record of assessment not previously noticed or investigated. Suppose a mistake in the original order of assessment is not discovered by the assessing officer, on further scrutiny, if it came to the notice of another assessor or even by a subordinate or a superior officer, it would be considered as information disclosed to the incumbent officer. If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of inform....
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....stification. If the assessing officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the assessing officer should have finally ascertained the fact by legal evidence or conclusion. The function of the assessing officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. 59. In CIT v. M.R. Shah Logistics (P) Ltd., reported in (2022) 14 SCC 101, the Apex Court held that Section 147 of the Act authorises the reopening of any assessment of a previous year ["147. Income escaping assessment.-If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the assessing officer may, subject to the provisions of Sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year. Referring to the Calcutta Discount Co. Ltd. Vs. ITO, reported in 1960 SCC OnLine SC 10, it was held that there is a duty cast on the assessee for disclo....
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.... are objective tangible material (in the form of documents, relevant to the issue) the sufficiency of that material cannot dictate the validity of the notice. The relevant paragraphs of the said Judgment of M.R. Shah Logistics (Supra) are extracted below: "18. Section 147 of the Act authorises the reopening of any assessment of a previous year ["147. Income escaping assessment.-If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the assessing officer may, subject to the provisions of Sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year). Explanation.-For the purposes of assessment or reassessment or recomputation under this section, the assessing officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of Section 148-A ....
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....not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of reasons for the belief. The expression "reason to believe" does not mean a purely subjective satisfaction on the part of the Income Tax Officer. 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. To this limited extent, the action of the Income Tax Officer in starting proceedings in respect of income escaping assessment is open to challenge in a court of law." 21. In Phool Chand Bajrang Lal v. ITO [Phool Chand Bajrang Lal v. ITO, (1993) 4 SCC 77 : (1993) 1 SCR Supp 28], after reviewing the previous case law, and concluding that a valid reopening is one, preceded by specific, reliable and relevant information, and that the sufficiency of such reasons is not subject to judicial review the only caveat being that the court can examine the record, if such material existed, i....
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....ar, on a clean slate as it were. Therefore, to hold as the High Court did, in this case, that since the assessee may have a reasonable explanation, is not a ground for quashing a notice under Section 147. As long as there is objective tangible material (in the form of documents, relevant to the issue) the sufficiency of that material cannot dictate the validity of the notice." 60. In ITO v. Selected Dalurband Coal Co. (P) Ltd., reported in (1997) 10 SCC 68, the Apex Court held that there must be relevant material before the assessing officer upon which he must reasonably and rationally form the requisite opinion. It was held that that the formation of belief by the Income Tax Officer is essentially within his subjective satisfaction. In the said matter, the proceedings under Section 147 was initiated on the basis of the letter of the Chief Mining Officer and the question before the Apex Court is whether the said letter can be construed to be relevant material upon which the Income Tax Officer can form a requisite belief. The Apex Court concluded that the said letter cannot be construed to be not relevant material or the basis on which the Income Tax Officer could not have reason....
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....l-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 not the concern at this stage. It may well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid. Inasmuch as, as a result of our order, the reassessment proceedings have now to go on, we do not and we ought not to express any opinion on merits." 61. In Central Provinces Manganese Ore Co. Ltd. v. ITO, reported in (1991) 4 SCC 166, the Apex Court held that there are two conditions to confer jurisdiction under Section 147(a) of the Act which are required to be satisfied. The first one is that the Income Tax Officer must have reason to believe t....
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....assessee that latitude. In this context the reference to the Judgment of the Apex Court rendered in Phool Chand Bajrang Lal & Anr. Vs. Income Tax Officer & Anr., reported in (1993) 4 SCC 77 has already been made in the foregoing paragraphs. 63. From the law discussed above, it is seek that the precondition for incoming powers under Sections 147/148 is the belief of the assessing officer that there are materials for the belief that income had escaped assessment. This belief must be taken down in writing and there must be tangible materials which have a live link for entertaining such a belief. Once these preconditions are satisfied then the assessing officer can proceed under Sections 147/148 of the Act. The possibility that this belief may ultimately be unfounded will not be a ground to interfere the notice under Section 148. Further the reasons must also be supplied to the assesse. 64. Under such circumstances, the contention of the petitioner that once the returns have been filed and have been accepted and the same cannot be re-opened at any stage would be contrary to the very provision of Section 147 more particularly after the amendment with effect from 01.04.1989 whereby....