Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment years 1999-2000 to 2001-02 - Whether a mere reason to suspect can be equated with a reason to believe, which is a necessary pre-condition for any action under section 147 - Held, no - During a survey conducted at business premises of assessee on 7-3-2002, it was found that business premises was under renovation; and that there was discrepancy in stock - On basis of survey report, Assessing Officer reopened assessments of assessee for relevant assessment years on grounds that discrepancy in stock was likely to occur in relevant years also and income to that extent had escaped assessment; and that assessee had not booked any expenses on account of renovation of business premises and, thus, investments made in renovation work had escaped assessment - Whether when survey was conducted on 7-3-2002, which fell in year subsequent to three years in question and reasons, as recorded, did not show or indicate existence of any evidence regarding escapement of income in three years in question, Assessing Officer was justified in reopening assessment on basis of mere suspicion - Held, no FACTS A survey under section 133A was conducted at the business premises of the assessee on 7-3-2002 and it was found that the business premises was under renovation and there was a discrepancy in the stock. Thereafter, the Assessing Officer reopened the assessments of the assessee for the assessment years 1999-2000 to 2001-02 after recording the reasons : (i) that discrepancy in the stock in those years also was likely to occur and income to that extent had escaped assessment; and (ii) that extensive renovation work in the business premises of the assessee had been undertaken, but the assessee had not booked any expenses on account of renovation of the business premises and investments made in the renovation work had escaped assessment. The assessee objected to reopening of assessments, but the Assessing Officer overruled the same and completed assessments making additions on account of unaccounted expenditure on renovation of premises as also in respect of unexplained…

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