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The Tax PublishersITA No. 1462/Mum/2020
2022 TaxPub(DT) 0524 (Mum-Trib)INCOME TAX ACT, 1961
Section 147
Case of assessee was reopened by AO after duly applying his mind to the information pertaining to bogus LTCG/STCL that was uploaded by the Directorate of Systems (wherein the assessee's name had figured as one of the beneficiaries) and, arriving at a bona fide belief that the income of the assessee chargeable to tax had escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. Therefore, AO validly assumed jurisdiction under section 147 and reopened the case of assessee.
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Reassessment - Reopening based on investigation report - Assessee alleged borrowed satisfaction on AO's part -
AO received information from investigation wing as to assessee being beneficiary of providers of bogus entries of long-term capital gain (LTCG) of a scrip, viz., JMD Telefilms industries Ltd., a penny stock company. Accordingly, AO reopened assessment so as to make addition under section 68. Assessee contended that assessment was reopened on the basis of borrowed satisfaction without conclusive proof as to tax escapement of income. Held: As was discernible from the 'reasons to believe', the case of assessee was reopened by AO after duly applying his mind to the information pertaining to bogus LTCG/STCL that was uploaded by the Directorate of Systems (wherein the assessee's name had figured as one of the beneficiaries) and, arriving at a bona fide belief that the income of the assessee chargeable to tax had escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If AO has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that AO should have finally ascertained the fact by legal evidence or conclusion. At the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. This is so because the formation of belief by AO is within the realm of subjective satisfaction. Therefore, AO validly assumed jurisdiction under section 147 and reopened the case of assessee.
Relied:Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC) : 2007 TaxPub(DT) 1257 (SC), ITO v. Selected Dalurband Coal Co. (P) Ltd. (1996) 132 CTR (SC) 162 : (1996) 217 ITR 597 (SC) : 1996 TaxPub(DT) 233 (SC) and Raymond Woollen Mills Ltd. v. ITO (1999) 152 CTR (SC) 418 : (1999) 236 ITR 34 (SC) : 1999 TaxPub(DT) 348 (SC)
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 68
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