INCOME TAX ACT, 1961

--Reassessment--Reason to believe No tangible material to prove escapement--Assessee had purchased a land and assessing officer on the basis of valuation made by Stamp Duty Authority and Income-tax Inspector's report concluded that there was escapement of income and initiated proceedings under section 147. Assessee contended that the assessing officer had no reason to believe that income had escaped assessment and therefore, report of Inspector was contrary to law as he is not competent authority for determining the cost of any land. Held: Action of assessing officer was not justified on both counts.

Inspector's report cannot be the basis for formation of belief regarding escapement of income. There has to be reason for formation of belief and the reason should be such, from which prima facie it could be inferred that there is escapement of income. Every reason, if remotely connected with the issue, cannot be said to be a sufficient reason for formation of belief regarding escapement of income. Merely because the stamp valuation authority has adopted certain valuation for payment of stamp duty, the same cannot be a basis to conclude regarding escapement of income in the hands of purchase, particularly when no tangible material has been brought on record to suggest the escapement of income except the Inspector's report which cannot be relied upon.

Income Tax Act, 1961, Section 147

IN THE ITAT, JODHPUR BENCH

S.V. MEHROTRA, A.M. & V.D. RAO, J.M.

ITO v. Shiv Shakti Build Home (P) Ltd.

ITA No. 157/Jd/2009

A.Y 2005-06