The 'reason to believe' for reassessment must be based on tangible material with a direct nexus to the formation of the belief, and reassessment cannot be made on a change of opinion.

JUDGMENT :

1. Heard Sri Aloke Kumar, learned counsel for the petitioner and Sri Praveen Kumar, learned Senior Standing Counsel for the Income Tax Department.

2. This writ petition has been filed praying for the following relief:-

"(i) Issue a suitable writ, order or direction in the nature of certiorari quashing the notice dated 31.03.2021 and 22.11.2021(contained as Annexure 2 and 4 to the writ petition) issued by respondent n.2 for reassessment under Section 148 and 143(2) read with Section 147 of the Act for the assessment year 2017-18.

(i-a) Issue a suit writ, order or direction in the nature of certiorari quashing the order dated 30/03.2022 (contained as Annexure No.8 to the writ petition) passed by the respondent no. 3 under section 147 read with section 144B of the Income Tax Act,1961 for the assessment year 2017-18"

Facts

3. Briefly stated facts of the present case are that the petitioner derives income from civil contract work. For the Assessment Year 2017-18, the petitioner filed a return of income on 21.03.2018 along with audit report dated 02.11.2017. The case of the petitioner was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act, 1961") was issued on 13.08.2018 which was followed by notices under Section 142(1) of the Act, 1961. A show cause notice dated 07.12.2019 was also issued to the petitioner and the petitioner submitted entire details as required by the assessing officer.

4. Vide notice dated 23.11.2019 under Section 142(1) of the Act, 1961 issued during the course of regular assessment proceedings, the assessing officer required the petitioner to furnish reply on several points and also required him to furnish entire details of all the accounts maintained with the Bank/Post Office/Financial Institutions and the cash deposited by him in the Bank during the demonetization period. Every details with regard to cash deposit were also required to be furnished. The petitioner furnished the entire details which were examined by the assessing authority. After thorough scrutiny of the case, the assessment order under Section 143(3) of the Income Tax Act, 1961 was passed on 25.12.2019 by the assessing officer, assessing the petitioner's total income at Rs. 44,74,620/-. He made an addition of Rs. 2,00,000/-.

5. Thereafter, notice dated 31.03.2021 under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2017-18 was issued by the assessing officer to the petitioner. The assessing officer recorded "reason to believe" as under:-

"As per the information received from the Investigation Wing under category of High Risk CRIU/VRU Information on Insight Portal of he Department, the assessee has deposited cash in aggregating sum of Rs. 4,97,24,000/-during demonetization period which is being treated as undisclosed income during the previous year related to the assessment year under consideration".

6. Aggrieved with the aforesaid notice for reassessment under Section 148 of the Income Tax Act, 1961, the petitioner has filed the present writ petition on 07.02.2022 which was subsequently amended. The reliefs sought in the present writ petition have been quoted above.

7. In paragraph 8 of the counter affidavit dated 25.04.2022, the respondent no.2 has stated as under:-

(8) That in the present case, since there was information that the assessee has undertaken huge financial transactions, much beyond the taxable limit, considering all the details and materials available on record, the case was selected for reassessment under Section 147/148 of Income Tax Act, 1961 as per CBDT Circular F.No. 225/40/2921/ITA-II dated 04.03.2021 which prescribes for guidelines regarding categories of cases to be considered as 'potential cases" for taking action under Section 148 of the Act by the jurisdictional assessing officer. The present case is covered under Clause-1(iii ) (a) of the aforesaid circular. For the kind perusal of this Hon'ble Court, a true photostat copy of the c