INCOME TAX ACT, 1961

Section 147

Reassessment - Validity - AO having sufficient material -

AO found that an amount of more than Rs. 87 lakhs had escaped assessment in the case of assessee and that the said amount was in the nature of payments made in cash towards expenditure exceeding more than Rs. 20,000 in a day, which otherwise was impermissible under the Income Tax Act. Accordingly, the AO issued notice under section 148 for reopening of assessment. Assessee contended that the reasons to believe recorded by AO were baseless as there was no finding as regards any suppression of material facts during the course of scrutiny assessment under section 143(iii). It was further contended that law is also well settled that even if there is a change of opinion, the proceeding of reassessment under section 147 could not have been initiated. Held: The phrase “Reasons to Believe” does not mean that the AO should have ascertained the facts by legal evidence. All that is required is that, the AO should prima facie have some material on the basis of which there should be reasons to believe of certain incomes chargeable to tax escaping assessment. There need not be any concrete evidence or proof available for coming to a final conclusion. In instant case, it was clearly revealed that there were sufficient reasons given by the AO, which according to him were “Reasons to believe” that an income of more than Rs. 87 Lakhs chargeable to tax had escaped assessment and which had come to the notice of Revenue at a later stage in the course of scrutiny. Therefore, the said reopening was valid and hence, the same would be sustainable.

REFERRED : ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Limited 2008 (14) SCC 208 : 2007 TaxPub(DT) 1257 (SC) ITO v. Selected Dalurband Coal Co. Private Limited 1996 (217) ITR 597 (SC) : 1996 TaxPub(DT) 0233 (SC) Phool Chand Bajrang Lal & Anr. v. ITO & Anr. 1993 (4) SCC 77 (SC) : 1993 TaxPub(DT) 1453 (SC) Jawand Sons, Ludhiana v. CIT (Appeals)-II (2010) 195 Taxman 144 (P&H) : 2010 TaxPub(DT) 1017 (P&H-HC)

FAVOUR : Against the assessee

A.Y. : 2015-16

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