Log In

| Recover password


The P & H High Court in the case of Bal Ram Jakhar v. CIT (250ITR393) held that one of the purposes of section 147 is to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say ‘ you accepted my lie, now your hands are tied and you can do nothing’. It would then be a travesty of justice to allow the assessee that latitude.

In this case the assessees name figured in the hawala scam inquiry though but no charges were framed in the ultimate. Even after that the assessing officer initiated an action u/s 147 for reopening original assessment on the basis of a charge sheet filed against him under the Prevention of Corruption Act.

In declining to interfere with the action of the assessing officer the High Court stressed that the AO may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes in his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a mere change of opinion of the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non- specific information.

It is therefore advisable for assessees to demand from the assessing officer the particulars of the specific information that has prompted him to issue a notice u/s 148 and then reassess the bona fide in this regard and to further see whether that material had any rational connection or a live link for the formation of the requisite belief. Based on this the assessee can challenge the conclusion arrived at by the AO before the Courts. But the assessee cannot challenge the sufficiency or incorrectness of the material in his possession.

It may however be kept in view that after 01.04.1989 the AO is empowered to take such action even when the assessee has made full and true disclosure of the material facts at the time of original assessment. But even in such a scenario the AO must have a reasonable belief on the basis of some specific information in his possession, which can be inquired by the assessee to judge the rational connection.

Leave a Reply

Your email address will not be published.

error: Do not copy the content of this website.