A Bench of Justices JB Pardiwala and K Vinod Chandran dismissed four appeals filed by the brothers challenging a 2019 Delhi High Court judgment that had upheld the Income Tax (IT) Department’s decision to reopen their assessments.
The Court held that an investigation report pointing to the alleged overvaluation of shares constituted tangible material on the basis of which the Assessing Officer could form a reason to believe that income chargeable to tax had escaped assessment.
"The expression 'reason to believe' in Section 147 of the Act means cause or justification.
The Assessing Officer must have tangible material having a rational connection or a live link with the formation of the belief... At the stage of the notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief, and the sufficiency of the reasons is not a justiciable issue," the Court ruled.
A Bench of Justices JB Pardiwala and K Vinod Chandran dismissed four appeals filed by the brothers challenging a 2019 Delhi High Court judgment that had upheld the Income Tax (IT) Department’s decision to reopen their assessments.
The Court held that an investigation report pointing to the alleged overvaluation of shares constituted tangible material on the basis of which the Assessing Officer could form a reason to believe that income chargeable to tax had escaped assessment.
"The expression 'reason to believe' in Section 147 of the Act means cause or justification. The Assessing Officer must have tangible material having a rational connection or a live link with the formation of the belief... At the stage of the notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief, and the sufficiency of the reasons is not a justiciable issue," the Court ruled.
