TaxTMI 
TaxTMI 
2026 (10) TMI 265
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.... CIT(A) has erred in confirming the additions made by the Ld. AO without appreciating that no proper opportunity of being heard or rebuttal was afforded to the appellant. The failure to provide such opportunity is in gross violation of the principles of natural justice and are therefore unlawful, and liable to be deleted. 3. That, on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in confirming the addition made by the Learned Assessing Officer on account of disallowance of long-term capital loss amounting to Rs. 5,45,105/-. The said disallowance is contrary to the facts on record and settled principles of law. and is therefore liable to be deleted. 4. That, on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in confirming the addition made by the Learned Assessing Officer on account of disallowance of short-term capital loss amounting to Rs. 5,20,825/-. The said disallowance is arbitrary, unjustified, and contrary to law, and is therefore liable to be deleted. 5. That, on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in confirming the addition made by the Learned Assessing Office....
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....he statutory pre-condition that the Ld. AO has "reason to believe" that any income chargeable to tax has escaped assessment. 2. During the course of the hearing, Appellant has raised the fundamental question of law as set out in Ground No. 1 of the present appeal. It is respectfully submitted that the reasons recorded by the Ld. AO do not disclose any "reason to believe" that income chargeable to tax had escaped assessment. The reasons merely record certain observations requiring verification, which, at the highest, amount to a "reason to suspect" and not a "reason to believe" as mandated under Section 147 of the Act. 3. The reasons recorded by the Ld. AO for initiating proceedings under Section 148 as mentioned in para 2 of the assessment order. Subsequently, a bare reading of the para 2 of the assessment order, demonstrates that the Ld. AO has nowhere recorded a belief that any income chargeable to tax had escaped assessment. The reasons merely indicate that certain claims required verification or that certain supporting particulars were not available on record. Such observations do not satisfy the statutory requirement of formation of a bona fide belief regardi....
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..... [(2011) 338 ITR 51 (Delhi)]. 7. Submission to Ground No. 3: Disallowance of Long-Term Capital Loss- The Ld. CIT(A) erred in disallowing the Long-Term Capital Loss amounting to Rs. 5,45,105/-. The complete documentary evidence in support of the claim has been placed on record and forms part of the Paper Book at Pages 167 to 184. 8. Submission to Ground No. 4: Disallowance of Short-Term Capital Loss- The learned Assessing Officer further erred in disallowing the Short-Term Capital Loss amounting to Rs. 5,20,825/-. The relevant documentary evidence supporting the claim has also been filed in the Paper Book at Pages 93 to 166. 9. Submission to Ground No. 6: Disallowance of Travelling Expenses-The Appellant, vide letter dated 26.03.2002, specifically informed the Ld. AO that the entire expenditure relating to the Appellant's travel to the United States of America had been borne by his brother, who was residing in the U.S.A." 6. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 7. Considered the rival submissions and material placed on record. At the time of hearing, ld. AR specifically argued legal issue rais....
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....ment. I observed that the findings of ld. CIT(A) are contrary to the settled position of law. 11. In support of the above proposition, I find force from the judgment of the Hon'ble Supreme Court in Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax (1971) 82 ITR 147, wherein it was held that "reason to believe" postulates belief founded on relevant material and not mere suspicion, gossip or rumour. 12. Further, in the case of Signature Hotels (P) Ltd. Vs. ITO and another, of the Hon'ble Delhi High Court, reported in 338 ITR 51 (Delhi), it was held as under:- "For the A.Y. 2003-04, the return of income of the assessee company was accepted u/s. 143(1) of the Income-tax Act, 1961 and was not selected for scrutiny. Subsequently, the Assessing Officer issued notice u/s. 148 which was objected by the assessee. The Assessing Officer rejected the objections. The assessee company filed writ petition and challenged the notice and the order on objections. The Delhi High Court allowed the writ petition and held as under: "(i) Section 147 of the Income-tax Act, 1961, is wide but not plenary. The Assessing Officer must have 'reason to believe' ....