Validity of Reassessment to verify genuineness of gift based on Assessment of relatives

It is a trite law that the reasons for formation of belief not only should have a rational connection or relevant bearing with the material, but it must also have direct nexus or live-link between the material coming to the notice of the Assessing Officer and the formation of his belief that there has been escapement of income of the assessee from assessment. It is not any and every material howsoever weak or remote or farfetched which could warrant formation of belief relating to escapement of income of the assessee, albeit the material coming in possession of the AO must have direct and proximate nexus with income escaping assessment.

Here there is no such material or information having coming to the possession of the Assessing Officer that the gift received by the assessee from Shri Rajiv Gupta is either bogus or non-genuine. Making a reference to another assessment order completely divorced from the material and information on record from the case of the assessee, cannot constitute a tangible material for the formation of belief as stipulated under section 147.

Here the Assessing Officer after stating the facts from another assessment order has gone into realm of presumption and surmises that if in the case of one of the family members it has been found that gifts were non-genuine, then the gifts received by the assessee in this year from a different person altogether is also not genuine. Had it been a case here that the same donor have given gift to other family members, in whose case it was found that such gifts are bogus and non-genuine, then perhaps one could say that there is some material having rational connection to entertain the reason to believe that similar kind of gifts from same donor could be non-genuine.