Dhrub Narayan Parihast Vs ITO (ITAT Ranchi)
Reopening on “Reason to Suspect” quashed – No Reassessment without Tangible Material; Suspicion is Not Belief- ITAT Ranchi quashes reopening based on Mere Suspicion
Ranchi ITAT has quashed the reassessment proceedings initiated u/s 147, holding that the reasons recorded by AO were nothing but a case of “reason to suspect” & not “reason to believe.”
Assessee, who was working as Head Pujari in Shiv Temple, was subjected to reopening of assessment for AY 2009-10. AO recorded reasons based upon an investigation report of the DDIT (Inv.), wherein it was mentioned that Assessee was earning an annual income of ₹12 to ₹15 lakhs from puja work & had earned an amount of around ₹1 crore from sale of land . It was further stated that he had invested in land & constructed immovable property & had purchased land at other places also. Based on these general allegations, AO formed an opinion that the income chargeable to tax had escaped assessment & accordingly issued notice u/s 148 after obtaining approval of PCIT.
Assessee challenged the reopening before CIT(A), who however confirmed the action of AO. Assessee carried the matter in appeal before Tribunal. It was contended that the reasons recorded by AO were vague & general in nature & did not disclose any live link between the material & the alleged escapement of income. The reasons recorded is clearly a fishing & roving enquiry. It was further argued that identical reasons recorded in the case of the assessee’s mother had already been quashed by the Hon’ble Jharkhand High Court, where the Court had held that such reasons are nothing but “reason to suspect.” The law is no more res integra, inasmuch as, the AO cannot take recourse of reassessment proceeding just for the purpose of verification. There is a difference between reason to believe & reason to suspect. Reliance was placed on ITO vs. Lakhmani Mewal Das (103 ITR 437 SC ) wherein it was held that reassessment cannot be initiated on mere suspicion & also on the judgment of the Hon’ble Jharkhand High Court in the case of Naveen Kumar Jaiswal (2022 SCC Online Jhar 189) holding that reopening cannot be done merely for verification of transactions.
