Section 147 can be invoked only if AO has reason to believe that taxable income has escaped assessment

Brief of the case

In case of Oriental Insurance Company vs. CIT, Delhi High Court held that AO could not assume jurisdiction to reopen assessment u/s 147, until his reasons of belief have a ‘direct nexus’ and a ‘live link’ with the opinion formed by him, that Taxable Income of Assessee has escaped assessment.

Facts of the case

• The Appellant Company is a subsidiary of General Insurance Corporation of India and is engaged in the business of General Insurance comprising of Fire, Marine and Miscellaneous Insurance Business.It invests its policy holder’s funds as per the statutory guidelines provided under The Insurance Act, 1938 and IRDA Regulations, 2000.

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