“reason to believe”

ReassessmentSection 147Section 1474,202 judgments

The decision most relied on for reason to believe is CIT v. Kelvinator of India Ltd. (320 ITR 561), cited in 1,673 judgments on BharatTax.

Leading authorities on reason to believe

CIT v. Kelvinator of India Ltd.

320 ITR 561 · 2010 · Supreme Court

1,673

citing judgments

An Assessing Officer cannot initiate reassessment proceedings under Section 147 of the Income Tax Act based on a mere change of opinion. Reassessment is permissible only when there is fresh tangible material leading to the belief of income escapement, not merely a review of existing facts.

CIT v. Durga Prasad More

82 ITR 540 · 1971 · Supreme Court

1,579

citing judgments

Tax authorities must judge evidence using the test of human probabilities and consider the apparent as real until there are reasons to believe it is not. They can rely on circumstantial evidence and the preponderance of probabilities to determine the genuineness of transactions.

ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd.

291 ITR 500 · 2007 · Supreme Court

1,030

citing judgments

For initiating reassessment proceedings under Section 147, the Assessing Officer needs only prima facie material providing a reason to believe that income has escaped assessment. Conclusive proof or the sufficiency/correctness of the material is not required at the stage of issuing the notice under Section 148.

Raymond Woollen Mills Ltd. v. ITO

236 ITR 34 · 1999 · Supreme Court

862

citing judgments

For reassessment proceedings under Section 148, the Assessing Officer only needs prima facie material to have a reason to believe income has escaped assessment. Conclusive proof or evaluation of the sufficiency and correctness of such material is not required at the stage of issuing the notice.

ITO v. Lakhmani Mewal Das

103 ITR 437 · 1976 · Supreme Court

721

citing judgments

For reassessment proceedings, the 'reason to believe' that income has escaped assessment must be based on some material and not mere suspicion, establishing a live link between the information and the belief. Furthermore, for reassessment beyond four years, there must be a specific finding of the assessee's failure to disclose fully and truly all material facts.

CIT v. Jet Airways (I) Ltd.

331 ITR 236 · 2011 · High Court

694

citing judgments

The Assessing Officer loses jurisdiction and the entire reassessment becomes invalid if no addition is made in respect of the income that formed the basis of the reopening. Explanation 3 to Section 147 does not permit assessing other escaped income unless an addition is made for the original income forming the reason to believe.

PCIT v. Meenakshi Overseas Pvt. Ltd.

395 ITR 677 · 2017 · High Court

471

citing judgments

Reassessment proceedings initiated solely based on an investigation wing/appraisal report, without the Assessing Officer's independent application of mind to form a 'reason to believe' that income has escaped assessment, are beyond jurisdiction, bad in law, and void ab initio.

CIT v. Kelvinator of India Ltd.

256 ITR 1 · 2002 · High Court

439

citing judgments

An Assessing Officer cannot reopen an assessment under Section 147 based on a mere change of opinion regarding the same material available during the original assessment. Reopening requires fresh, tangible material or information that leads to a reason to believe income has escaped assessment.

Judgments citing reason to believe

M/S Din Dayal Pursotam Lal, Sirsa vs. Pr.CIT, Rohtak

ITA 146/CHANDI/2021[2011-12]Status: DisposedITAT Chandigarh04 Mar 2024AY 2011-12

Bench: SHRI A.D.JAIN (Vice President), SHRI VIKRAM SINGH YADAV (Accountant Member)

For Appellant: Shri Gautam Jain, Advocate &For Respondent: Shri Rohit Sharma, CIT-DR

Section 147Section 263Section 40A(3)

issued mechanically without application of mind much less independent application of mind and without having any tangible, relevant credible material to form a reason to believe that income of the appellant has escaped assessment therefore the order of assessment u/s 147/143(3) of the Act was without jurisdiction ... transactions, in support of which the Department is having tangible information which is not accounted in the books of the assessee. I have reasons to believe that an income of Rs.58,42,590/- chargeable to tax for the assessment year 2011-12, besides any other income which comes to notice

Income Tax Officer, Ward-1(2), Jaipur vs. Mukesh Kumar Soni, Jaipur

In the result appeal of the revenue is dismissed and the cross

ITA 656/JPR/2023[2018-19]Status: DisposedITAT Jaipur04 Mar 2024AY 2018-19

Bench: Moving Towards The Facts Of The Case We Would Like To Mention

For Appellant: Sh. S. B. Natani (FCA)For Respondent: Sh. Arvind Kumar (CIT)

Section 143(1)Section 143(3)Section 144BSection 147Section 148A

averred that : *16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification ... Assessing Officer 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 the Assessing Officer should have finally ascertained the fact by legal conclusion

Upinder Kaur Khalsa Rao, Mumbai vs. Income Tax Officer 35(3)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 3670/MUM/2023[2011-12]Status: DisposedITAT Mumbai04 Mar 2024AY 2011-12

Bench: Shri Vikas Awasthy, Jm & Ms Padmavathy S, Am

For Appellant: Shri Haridas Bhat, CAFor Respondent: 27.02.2024

Section 148Section 2(24)

Since the assessee has not filed the return of income for the AY 2011- 12 the AO had a reason to believe that the income chargeable to tax to the extent of the amount received by the assessee from the developer has escaped assessment, and accordingly the AO re-opened

Eastern Drug & Sanitary Product, Meerut vs. Pr, CIT, Ghaziabad

In the result, the appeal of the assessee is allowed

ITA 1110/DEL/2022[2012-13]Status: DisposedITAT Delhi04 Mar 2024AY 2012-13

Bench: Shri Amit Shukla & Shri M. Balaganesh[Assessment Year: 2012-13]

Section 143(3)Section 147Section 148Section 263Section 40

company excessive and thereby income has been reduced. Therefore, the income escaped assessment. In view of the above facts and findings, I have reason to believe that income chargeable to tax to the extent of Rs.8,77,47,368/- has escaped assessment within the meaning of section ... audit party is not legal unless otherwise the AO himself had gone through and examined the records and find anything which gives a reason to believe that income had escaped assessment.” 5. Further, in another reply, the assessee submitted reconciliation statement of the credit entries recorded in the bank account

ACIT, New Delhi vs. M/S. Continental Foundation Joint Venture, New Delhi

In the result, the Revenue’s appeal is dismissed and the additional ground raised by the assessee under Rule-27 is allowed

ITA 111/DEL/2017[2007-08]Status: DisposedITAT Delhi04 Mar 2024AY 2007-08

Bench: Shri Amit Shukla & Shri M. Balaganesh[Assessment Year: 2006-07]

Section 147Section 148Section 40

four years from the end of the relevant assessment year. The reasons recorded by the AO reads as under:- “That in the reason to believe, the Assessing Officer has mentioned (i) From the perusal of the record, it was revealed that during the year consideration the assessee had debited ... which TDS has not been deducted will not be allowable as expenses claimed. (iv) Lastly thereafter, the Assessing Officer mentioned that he has reason to believe that income chargeable to tax has escaped assessment for the Assessment Year 2006-07 for the reason of failure on the part

Continental Foundation Joint Venture, New Delhi vs. ACIT, New Delhi

In the result, the Revenue’s appeal is dismissed and the additional ground raised by the assessee under Rule-27 is allowed

ITA 2677/DEL/2016[2006-07]Status: DisposedITAT Delhi04 Mar 2024AY 2006-07

Bench: Shri Amit Shukla & Shri M. Balaganesh[Assessment Year: 2006-07]

Section 147Section 148Section 40

M/S. Prakash Industries Ltd, New Delhi vs. ACIT, Hisar

In the result, the appeal of the assessee in ITA No

ITA 1389/DEL/2014[2007-08]Status: DisposedITAT Delhi04 Mar 2024AY 2007-08

Bench: Shri N.K. Billaiya & Ms Astha Chandra

For Appellant: Shri Ajay Wadhwa, AdvFor Respondent: Shri Vivek Vardhan, Sr. DR

Section 115JSection 143(3)Section 154Section 205(1)(b)Section 234B

alternate tax (MAT). In such circumstances, Tribunal took the view that at the relevant point of time assessee had a justifiable and plausible reason to believe that no advance tax was required to be paid by it. Being a corporate entity with respect to liability under section 115JB

Dattatraya Krishnappa Lonakar, Haveri vs. Income-Tax Officer, Ward-1, Haveri

In the result, appeal of the assessee is partly allowed

ITA 1143/BANG/2023[2017-18]Status: DisposedITAT Bangalore29 Feb 2024AY 2017-18

Bench: SHRI GEORGE GEORGE K. (Vice President), SHRI CHANDRA POOJARI (Accountant Member)

For Appellant: Shri Ravi Shankar, A.RFor Respondent: Smt. Akta Jain B., D.R

Section 115BSection 147Section 148Section 151Section 234ASection 250Section 68Section 69

learned assessing officer, may, utmost be considered as reason to suspect and under no stretch of imagination the same cannot be construed as reason to believe which is a basic ingredient for a valid assumption of re- assessment under the facts and circumstances of the case. 7. The Appellant craves

Simcorp Fund Limited, Mumbai vs. Deputy Commissioner of Income Tax Circle- 4(3), Mumbai

In the result, the appeal filed by the assessee is allowed

ITA 3340/MUM/2023[2005-06]Status: DisposedITAT Mumbai29 Feb 2024AY 2005-06

Bench: Shri Br Baskaran, Am & Shri Aby T. Varkey, Jm

For Appellant: Shri Rakesh JoshiFor Respondent: Shri Nayanjyoti Nath, DR

Section 143(3)Section 144Section 147Section 148Section 68

that before reopening an assessment, AO has to record the reasons wherein he has to spell out the “Reasons to believe, escapement of income”. It is well settled that “Reasons to believe” postulate foundation based on information, and belief based on reason. After a foundation based on information is made ... belief that income chargeable to tax has escaped assessment. And one should bear in mind the fine distinction between “Reason to Suspect” and “Reason to believe”. Information adverse may trigger “Reason to Suspect” which is not sufficient to reopen an assessment because as per section

Addl.CIT, Special Range-18, New Delhi vs. Jagananth Hemchand Jain, New Delhi

In the result, the appeal of the Revenue as well as Cross Objection of the assessee is dismissed

ITA 7755/DEL/2018[2011-12]Status: DisposedITAT Delhi29 Feb 2024AY 2011-12

Bench: Shri Pradip Kumar Kedia & Shri Yogesh Kumar Us

Section 143(3)Section 145(3)Section 147Section 148Section 148(2)Section 69C

order passed is invalid and bad in law. 2. That there was no valid material available with the assessing officer and accordingly the Reason to believe as made by the AO is based on suspicion and therefore the Re- assessment order, as passed in furtherance thereof is arbitrary, unjust ... That the alleged reason to believe, as made by the AO is without application of mind and are in the nature of suspicion and also based on borrowed satisfaction and accordingly the Re-assessment so framed in furtherance thereof is arbitrary and bad in law. 4. That without prejudice

Addl.CIT, Special Range-18, New Delhi vs. Jagananth Hemchand Jain, New Delhi

In the result, the appeal of the Revenue as well as Cross Objection of the assessee is dismissed

ITA 7754/DEL/2018[2010-11]Status: DisposedITAT Delhi29 Feb 2024AY 2010-11

Bench: Shri Pradip Kumar Kedia & Shri Yogesh Kumar Us

Section 143(3)Section 145(3)Section 147Section 148Section 148(2)Section 69C

Pnk Space Development Private Limited, Mumbai vs. Income Tax Officer, Ward 13(1)(4), Mumbai

In the result, the appeal filed by the assessee is dismissed

ITA 3286/MUM/2023[2012-13]Status: FixedITAT Mumbai28 Feb 2024AY 2012-13

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm Pnk Space Development Private Income Tax Officer, Ward 13(1)(4) Limited Mumbai 601, Purva Plaza, Shimpoli Road, Vs. Borivali West, Mumbai-400 092

For Appellant: NoneFor Respondent: Ms. Kakoli Ghosh

Section 132Section 132(4)Section 143(1)Section 143(3)Section 148Section 245D(4)Section 250Section 32(1)(ii)Section 69C

opening of assessment. while doing so he did not appreciate that; A. The assessing officer has not applied his mind to have reason to believe that assessable income has escaped assessment and the assessment was re-opened entirely on the basis of inquiries Rs.15,26,502/- 1. done and findings

Dy, Commissioner of Income Tax, Central Circle-3(4), Mumbai vs. Glint Infraporjects Private .Ltd, Mumbai

In the result, the appeal of the learned Assessing Officer and CO of the assessee, are dismissed

ITA 2166/MUM/2023[2012-13]Status: DisposedITAT Mumbai28 Feb 2024AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm Dy. Commissioner Of Income Glint Infraprojects Private Tax, Limited Central Circle 3(4), 5Th Floor, Sunteck Centre, Room No.1915, 19T Floor, Vs. 37-40 Subash Rd, Vile Parle Air India Building, (E), Mumbai-400 057 Nariman Point-400 021 (Appellant) (Respondent) Pan No. Aadcg5620L Co No. 131/Mum/2023 (Arising In Ita No.2166/Mum/2023 For A.Y. 12-13) Dy. Commissioner Of Income Glint Infraprojects Private Tax, Limited Central Circle 3(4), 5Th Floor, Sunteck Centre, Room No.1915, 19T Floor, Vs. 37-40 Subash Rd, Vile Parle Air India Building, (E), Mumbai-400 057 Nariman Point-400 021 (Appellant/ Cross Objector) (Respondent) Assessee By : Shri Gaurav Kabra, Ar Revenue By : Shri Mirza Azhar, Dr Date Of Hearing: 25.01.2024 Date Of Pronouncement : 28.02..2024

For Appellant: Shri Gaurav Kabra, ARFor Respondent: Shri Mirza Azhar, DR

Section 143(1)Section 143(3)Section 147Section 148Section 68

without any economic rationale or genuine underlying business transactions with sole intention of siphoning of funds to evade legitimate taxes. Therefore, I have reason to believe that the income of Rs.5,07,50,000/- chargeable to tax under the provisions of the Act has escaped assessment. Therefore ... scrutiny assessment u/s.143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s.147 is reason to believe which has been recorded in above paras. 7. It is pertinent to mention here that in this case the assessee has filed return of income

Neel Ventures Private Limited, Mumbai vs. ITO, 15(2)(3), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 1168/MUM/2023[2009-10]Status: DisposedITAT Mumbai28 Feb 2024AY 2009-10

Bench: Shri Aby T. Varkey, Jm & Shri Padmavathy S, Am आयकर अपील सं/ I.T.A. No.1168/Mum/2023 (निर्धारण वर्ा / Assessment Years: 2009-10) Neel Ventures Pvt. Ltd बिधम/ Ito-15(2)(3) B-47/187, Kalina Sunder 432, Aayakar Bhavan, Vs. Nagar Chs, Santacruz Maharashi Karve Road, (East), Mumbai-400098. Mumbai-400020. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaccn7025R (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: Shri Ashok Bansal Revenue By: Shri Ashok Kumar Ambastha (Sr. Dr) सुनवाई की तारीख / Date Of Hearing: 22/02/2024 घोषणा की तारीख /Date Of Pronouncement: 28/02/2024 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)/Nfac, Delhi Dated 10.02.2023 For The Assessment Year 2009-10. 2. The Assessee Has Challenged The Validity Of The Reopening By Ao (Jurisdiction) U/S 147 Of The Income Tax Act, 1961 (Hereinafter “The Act”). So The Legal Issue Is Taken Up First.

For Appellant: Shri Ashok BansalFor Respondent: Shri Ashok Kumar Ambastha (Sr. DR)

Section 147Section 148

assessee has challenged the jurisdiction of the AO to re- open the assessment on the ground that the AO did not had “Reasons to believe, escapement of income”, and therefore did not had the jurisdiction to re-open the assessment, we will first of all, examine the legal issue ... that before reopening an assessment the AO has to record the reasons wherein he has to spell out the “Reasons to believe, escapement of income”. It is well settled that “Reasons to believe” postulates foundation based on information and belief based on reason. After a foundation based on information

Premji Bhuralal Gala, Mumbai vs. NFAC, Delhi

In the result, appeal of the assessee is allowed on the validity of the re-opening u/s

ITA 3081/MUM/2022[2012-13]Status: DisposedITAT Mumbai28 Feb 2024AY 2012-13

Bench: Your Honors Should Have Been Filed Within 60 Days Of Receipt Of The Order Of Cxit(A) But The Same Could Not Be Done.

Section 143(1)Section 143(3)Section 147Section 69C

balance sheet for the relevant financial year. 4. Basis of forming reason to believe-Based on the above facts. I have reasons to believe that the income to the extent of Rs. 2,45,00,000/-, chargeable to tax in the hands of the assessee has escaped assessment within ... made, accordingly, no assessment was made and the only requirement to initiate proceedings u/s 147 is to reason to believe which has been recorded in Para 5 above. 6. It is pertinent to mention here that in this case the assessee has filed return of income for the year under

Snr Electronics Ltd, New Delhi vs. ITO Ward - 24(1), New Delhi

In the result, the appeal of the assessee is dismissed

ITA 937/DEL/2020[2009-10]Status: DisposedITAT Delhi28 Feb 2024AY 2009-10

Bench: Sh. Kul Bharatdr. B. R. R. Kumar

For Appellant: NoneFor Respondent: Ms. Deepti Chandola, Sr. DR

Section 143Section 147Section 148Section 151Section 292CSection 68Section 69C

appreciate that notice u/s 148 of the Act does not meet the requirement of law, in as much as there is no 'reason to believe' as contemplated u/s 147 of the Act with the Ld. AO to initiate reassessment proceedings. 2 SNR Electronics Ltd. 3. That ... original assessment and sought to be done in a different manner in the proceedings u/s 147 of the Act. Rather the reason to believe was appropriately understood by the Assessing Officer and there was material on the basis of which the notice was issued'. Similarly, in other case, Rajat Export

ITO, Ward-35(7), New Delhi vs. Sumitra Devi, Delhi

In the result, the appeal of the Revenue stands dismissed and the Cross Objection of the assessee is partly allowed

ITA 906/DEL/2020[2010-11]Status: DisposedITAT Delhi28 Feb 2024AY 2010-11

Bench: Dr. Brr Kumar & Ms. Astha Chandraasstt. Year: 2010-11 & Co. No. 173/Del/2022 Asstt. Year 2010-11 Ito, Ward-35(7), Vs. Smt. Sumitra Devi, New Delhi. Plot No. 132/133, First Floor, Pocket-12, Sector-24, Rohini, Delhi-110 085. Pan Craps6145R (Appellant) (Respondent)

For Appellant: Shri Sachin Kumar, AdvocateFor Respondent: Shri Piyush Tripathi, Sr. DR

Section 147Section 148Section 151Section 45(1)Section 45(5)(b)

without jurisdiction, is bad in law, null and void ab- initio and deserves to be annulled. (1) The purported 'reasons to believe' are based on the allegation that the Assessee did not file her return of income, whereas, as a matter of fact the return of income was filed ... Assessee. (2) The Id. ITO, ward 44(4) had no reason to believe' to initiate the proceedings under section 147 of the Act, the proceedings were initiated on highly misconceived grounds, in the nature of pretence and without any justification and on wrong facts. (3) The proceedings under section

Jitesh Jitendra Sakhidas, Mumbai vs. ITO Ward 30 (1) (5), Mumbai

In the result, the appeal of the assessee is allowed

ITA 3112/MUM/2023[2012-13]Status: DisposedITAT Mumbai27 Feb 2024AY 2012-13

Bench: Shri Pavan Kumar Gadale, Jm & Ms Padmavathy S, Am

For Appellant: Shri Nitesh Joshi, CAFor Respondent: Ms. Rajeshwari Menon, Sr. DR

Section 131Section 133ASection 143(1)Section 69B

statement of the Director of the said company was recorded. The AO re-opened the assessment stating that there is a reason to believe escapement of income since certain loose paper found during survey bears the Flat number of the assessee against which an amount of Rs.67 ... information is supported by the statement on oath of Shri Uma Shankaqr Saha. Hence, the information so received forms a strong base for reasons to believe that income has escaped assessment and to make additions of such escaped income in the hands of the assessee. D. Mere filing or production

Crosseas Capital Services Private Ltd, Mumbai vs. ACIT(Central)-2(4), Mumbai

In the result, all the four appeals filed by the assessee are hereby partly allowed

ITA 3420/MUM/2023[2018-19]Status: DisposedITAT Mumbai26 Feb 2024AY 2018-19

Bench: Shri Amit Shukla & Shri Amarjit Singhassessment Year: 2015-16 Assessment Year: 2014-15 Assessment Year: 2020-21 Assessment Year: 2018-19 M/S. Crosseas Capital Assistant Commissioenr Of Services P. Ltd., Income Tax (Central Suite 37, 5Th Floor, Circle)-2(4), Martin Burn House, Vs. 802, 8Th Floor, 1 Rn Mukherjee Road, Pratishtha Bhavan, Kolkata, Old Cgo Annexe, West Bengal - 700 001 Maharishi Karve Road, Pan: Aaccc5470H Mumbai – 400 020 (Appellant) (Respondent) Present For: Assessee By : Shri Firoze B. Andhyarujina , A.R. & Shri Maneck Andhyarujina, Ar. Revenue By : Shri H.M. Bhatt, D.R. Date Of Hearing : 06.02.2024 Date Of Pronouncement : 26.02.2024 O R D E R Per Bench : All These Four Appeals Are Filed By The Assessee Against The Different Orders Of Commissioner Of Income Tax Passed Under Section 250 Of The Act Pertaining To Assessment Year 2018-19 &

For Appellant: Shri Firoze B. Andhyarujina , A.R. &For Respondent: Shri H.M. Bhatt, D.R

Section 234BSection 250Section 37(1)

notice under section 148 the AO accepts the contention of the assessee and holds that income for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some

Crosseas Capital Services Private Limited, Mumbai vs. Assistant Commissioner of Income Tax (Central)-2(4), Mumbai

In the result, the appeal of the assessee in ITA

ITA 3419/MUM/2023[2020-21]Status: DisposedITAT Mumbai26 Feb 2024AY 2020-21

Bench: Shri Amit Shukla & Shri Amarjit Singh

Section 234BSection 250Section 37(1)