COMMISSIONER OF INCOME TAX Vs. SULOCHANA

JUDGEMENT

(1.) HEARD. The appeal is preferred against the order of the income Tax Appellate Tribunal Madras Bench "d" dated 21. 05. 2003 in i. T. A. Nos. 1619,1620,1621 and 1622/98, holding that the reassessments for the assessment years 1972-73, 1973-74, 1974-75 and 1977-78, in the case of the assessee was completed by the assessing officer without reason to believe that such income has escaped assessment.

(2.) THE appellant/revenue raised the following substantial question of law. "whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was right in holding that the reassessments for the assessment years 1972-73, 1973-74, 1974-75 and 1977-78 in the case of the assessee were completed by the assessing officer without reason to believe that income has escaped assessment and therefore the reassessments are liable to be set aside""

(3.) THE above proposition is also supported by another decision of the Apex Court reported in 103 ITR 437 (INCOME TAX OFFICER -vs-LAKHMANI MEWAL DAS)= (1976) 3 SCC 757 = AIR 1976 SC 1753, wherein it was held as follows:- "the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. THE expression'reason to believe'does not mean a purely subjective satisfaction on the part of the income tax officer. THE reason must be held in good faith. It cannot be merely a pretence. It is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous, irrelevant for the purpose of the Section. " * * * * * "as stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the income tax officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. . . . . . THE powers of the income tax officer to reopen assessment, though wide, are not plenary. THE words of the statute are'reason to believe'and not'reason to suspect'. THE reopening of the assessment after the lapse of many years is a serious matter. THE Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. THE underlying reason for that is the instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income tax authorities after the assessment has been completed. "