INCOME TAX ACT, 1961

Section 148

Reassessment - Reason to believe - Assessee obtained bogus/accommodation entries from certain entities according to information recieved from Investigation Wing. -

Assessee-individual was proprietor of a concern engaged in business of share trading.He filed regular return for relevant year. A search under section 132 was carried out at his residence and undisclosed income unearthed and block assessment proceedings were initiated under section 158BC and order was passed accordingly. Subsequent to block assessment, AO received information from Investigation Wing that proprietary concern of assessee obtained certain bogus/accommodation entries. AO issued notice under section 148 for reopening assessment. Assessee contended that notice issued on borrowed satisfaction without application of mind was invalid. Held: AO analyzed report of Investigation Wing and formed basis of reasons after specific reference of entries obtained from certain entities. AO reproduced all entries with details of amount, date of transaction, bank account from which entry was given, instrument number, etc. AO also mentioned that no scrutiny assessment under section 143(3) was completed in the case of assessee and therefore no information relating to transaction was available on record. At initiation stage, what is required is 'reason to believe' on the established fact of escapement of income. At stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have requisite belief. Whether the material should conclusively prove escapement is not the concern at this stage.

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2000-01

INCOME TAX ACT, 1961

Section 148 read with Section 158BC

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