Law:

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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 1989-90 - Whether Assessing Officer can assume jurisdiction for reassessment proceedings, provided he has reasons to believe, but same cannot be taken recourse to on basis of reasons to suspect - Held, yes - Assessing Officer had initiated reassessment proceedings on basis of information received from department's survey wing that a demand draft, got prepared by assessee, was not accounted for in her books of account - Whether since Assessing Officer had not examined and corroborated information so received before recording his own satisfaction of escaped income and initiating reassessment proceedings, it could be said that Assessing Officer had acted only on basis of suspicion and, therefore, issuance of notice under section 148 for reassessment proceedings was invalid - Held, yes FACTS The Assessing Officer, on receiving the information from the department's survey wing that the assessee prepared a demand draft, which was not accounted for in her books of account, issued a notice to the assessee under section 148 and thereafter completed reassessment by adding amount of draft to income of the assessee. On appeal, the first appellate authority upheld the validity of notice under section 148, but set aside the assessment as regards the addition made by the Assessing Officer and remitted the matter back to him to frame a fresh assessment after allowing reasonable opportunity of being heard to the assessee. On second appeal, the Tribunal held that since the Assessing Officer had failed to incorporate material and its satisfaction for reopening the assessment, the same was invalid. HELD Section 147 empowers the Assessing Officer to assess or reassess income chargeable to tax if he has reasons to believe that the income for any assessment year has escaped assessment. The power conferred under this section is very wide, but at the same time, it cannot be stated to be a plenary power. The Assessing Officer can assume jurisdiction under the said provision, provided there is sufficient material before him. He cannot act on the basis of his whim and…

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