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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 1996-97 - Whether it is not just a belief of Assessing Officer that is material for invoking section 147, but such a belief must be based on certain reasons; merely because Assessing Officer feels that issue requires 'much deeper scrutiny' is not enough ground for invoking section 147 - Held, yes FACTS The assessee-company had sold its agricultural land and claimed exemption under section 2(14) on the ground that the agricultural land sold by it was not a capital asset and, consequently, no capital gains accrued in its hands. Its return was processed under section 143(1)(a). Subsequently, the Assessing Officer reopened the assessment on the ground that the claim of assessee, that the land was agricultural in nature and, hence, not a capital asset, required much deeper scrutiny. Thereafter, the Assessing Officer completed the assessment holding that the land sold by the assessee was a capital asset within the meaning of section 2(14) and, accordingly, determined long-term capital gain accrued to the assessee. On appeal, the Commissioner (Appeals) held that merely by saying that the issue required much deeper scrutiny, no belief could be said to have been formed entitling the assessing authority to issue a notice under section 148 in order to initiate reassessment proceedings; and that no new fact or any other material had been brought to the file from the date on which the earlier return had been processed to the date when the reasons were recorded and, therefore, the assuming of jurisdiction by the Assessing Officer under section 147 and the issuance of notice under section 148 were illegal. Therefore, the Commissioner (Appeals) annulled the assessment. The Tribunal upheld the order of the Commissioner (Appeals). On appeal : HELD A reading of the reasons recorded did not disclose that the Assessing Officer, in fact, had reasons to believe that any income had escaped assessment. It is not just the belief of the Assessing Officer that is material, but such a belief must be based on certain reasons. There was no indication as to on what…

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