INCOME TAX ACT, 1961

Section 148

Reassessment - Reason to believe - Non disclosure of payment made in cash -

A search action in the case of RNS was conducted and evidence was gathered which pointed to receipt of certain amounts by assessee from the above company. These payments were made in cash and were not disclosed in regular books of accounts of the above company. Information relating to such payments were gathered from the diary notings of several key personnel of the company also from the deleted accounts named and styled 'Sundry Payments' which were retrieved from the hard disks of the searched company. AO issued Notice under section 148 on the ground that income chargeable to tax had escaped assessment. Held: The reasons were germane to the prima facie belief reached by AO for any chargeable income to tax had escaped assessment by reason of non-disclosing the above payments recorded any seized material by assessee in his books of account. Material that was considered by AO for reopening of assessment may not show conclusively that there was escapement of income. The statement available at the time of reopening of assessment, AO reached conclusion that there was escapement of income in the hands of the assessee. Reasons for reopening of assessment have nexus with the formation of AO's belief that income chargeable to tax had escaped assessment. The required nexus also can be established by the statement of searched party recorded under section 132(4). Thus, AO rightly reopened the assessment of assessee under section 148

REFERRED :

FAVOUR : Against the assessee

A.Y. :

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