IMPORTANT POINT
The central legal point established in the judgment is the requirement for the Assessing Officer to have a valid reason to believe that income chargeable to tax has escaped assessment, and the need for a rational connection between the material obtained and the belief that income has escaped assessment.

JUDGMENT :

(K.R. Shriram, J.) :

1. Petitioner, a Chartered Accountant by profession, had filed return of income for Assessment Years 2010-2011, 2011-2012 and 2012- 2013. The return for all the three years were processed under Section 143(1) of the Income Tax Act, 1961 (the Act). Thereafter, petitioner received identically worded notices all dated 20th March 2015 for Assessment Years 2010-2011, 2011-2012 and 2012-2013 seeking to reopen the assessment of those years. The reasons in support of the impugned notices are also identical, except the years and figures vary. The reasons read as under :

In this case as per the CIB information you have entered into huge share transaction for A.Y. 2010-11. As per the information received the value of the share transaction is Rs.29,43,22,193/-.

In view of the above, I have reason to believe that income chargeable to tax has escaped assessment and, therefore, to verify the above aspect, it is necessary to reopen the case for A.Y. 2010-11.

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In this case as per the CIB information you have entered into huge share transaction for A.Y. 2011-12. As per the information received the value of the share transaction is Rs.18,11,26,743/-.

In view of the above, I have reason to believe that income chargeable to tax has escaped assessment and, therefore, to verify the above aspect, it is necessary to reopen the case for A.Y. 2011-12.

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In this case as per the CIB information you have entered into huge share transaction for A.Y. 2012-13. As per the information received the value of the share transaction is Rs.66,16,51,715/-.

In view of the above, I have reason to believe that income chargeable to tax has escaped assessment and, therefore, to verify the above aspect, it is necessary to reopen the case for A.Y. 2012-13.

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2. Petitioner filed detailed objections dated 27th July 2015 which came to be rejected by an order dated 6th November 2015. In the order rejecting objections, it is recorded “ …… the information received from CIB may not be genuine and therefore requires further investigation. These facts in itself are enough to form an independent belief to reopen the assessment …...”. Therefore, we have to note that even in the order rejecting the objections itself there is an admission that information from CIB, based on which the notice under Section 148 of the Act has been issued, may not be genuine.

3. At this stage, petitioner filed the present petition which came to be admitted by an order dated 13th April 2016. The order reads as under :

1. Heard. Rule. Respondent waives service.

2. This petition challenges three Notices dated 20th March, 2015 under Section 148 of the Income Tax Act, 1961 seeking to reopen the assessment for Assessment Years 2010-11, 2011-12 and 2012-13. The reasons in support of the impugned notices are similar. The basis as recorded in the reasons is that C.I.B. information was received that the petitioner was having huge transactions in shares. This information led the Assessing Officer to believe that income chargeable to tax has escaped assessment. Further, the reasons also record that reopening of assessment is necessary to verify the above aspect.

3. The reasons as recorded do not indicate any link between the material obtained from the C.I.B. and the reasons to believe that income chargeable to tax has escaped assessment. In the absence of any indication of how the material obtained has led to the belief the income chargeable to tax has escaped assessment, the reasons prima facie, do not disclose any reason to believe that income chargeable to tax has escaped assessment.

4. In view of the above, all the three Notices dated 20th March, 2015 seeking to reopen the assessment for Assessment Years 2010-11, 2011-12 and 2012-13 are stayed till the final disposal of this petition.

4. An affidavit in reply has been filed in which it is stated “ ………… But the actual extent of escapement of income can be established only after detailed investigation after providi