INCOME TAX ACT, 1961

Section 147 & 148

Reassessment - Notice issued under section 148 - AO not having any reason to believe that income chargeable to tax had escaped assessment but only reason to suspect -

AO issued a notice under section 148 for reopening assessment. It was alleged that the AO of an entity, namely, 'C' informed the AO of assessee that certain cash was deposited in bank account of the assessee and immediately, the amount was transferred through cheque in the bank account of 'C' and that the assessee was a director/family member of 'C'. Thus, the AO was required to examine the case of the assessee for relevant assessment year so that such unaccounted money could be brought to tax. Held: It was a case, where assessment had been completed under section 143(3) and notice under section 148 was issued after expiry of four years from the end of relevant assessment year. Thus, proviso to section 147 would apply. There was nothing to indicate in reason to believe that there was any failure on the part of assessee to disclose the fact that a sum was deposited in his bank account. In fact, there could not have been any failure because cheque was given to 'C'. Further, the AO did not say that any income chargeable to tax had escaped assessment. All that the AO desired was examination of certain details pertaining to the amount paid by the assessee to 'C'. Just because some information was received by AO, it would not entitle the AO to reopen assessment. The reasons must be found on the satisfaction of the AO that income chargeable to tax had escaped assessment. In the instant case, there was no reasons to believe but, only the reason to suspect. Hence, reopening of assessment was not satisfactory.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08

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