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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Illustrations - Assessment year 1996-97 - In his statement recorded under section 131, director of 'V' Ltd. stated that he received cash from certain persons and thereafter cheques of equal amounts were issued to them - On basis of said statement, Assessing Officer issued impugned notice in respect of loan admittedly taken by assessee-company from 'V' Ltd. - Whether when a challenge is made to action under section 147 what court is required to examine is whether some material exists on record for Assessing Officer to form requisite belief and reasons for belief have a rational nexus or a relevant bearing to formation of such belief and are not extraneous or irrelevant for purpose of said section - Held, yes - Whether, however, sufficiency of grounds, which induced Assessing Officer to act under said section is not a justiciable issue - Held, yes - Whether, in instant case, it could be said that there was material information on record which could provide foundation for Assessing Officer's belief that assessee's transaction with 'V' Ltd. was not genuine and its income had escaped assessment on that account - Held, no FACTS After the expiry of more than 4 years from the end of the relevant assessment year, the assessee-company was issued a notice under section 148 purportedly on the basis of the statement made under section 131 by 'V', the director of 'V' Ltd. from which the assessee had admittedly taken loan during the relevant previous year. In his statement recorded under section 131, director of 'V' Ltd. stated that he received cash from certain persons and thereafter cheques of equal amounts were issued to them. The Assessing Officer was of the view that he had reason to believe that the income chargeable to tax had escaped assessment within the meaning of section 147 Explanation 2(b). After obtaining the approval of the Addl. Commissioner, the Assessing Officer issued the impugned notice. Alleging that in his statement 'V' had nowhere stated that the loan given to assessee was bogus, no adverse inference could be drawn against the assessee towards the loan transaction and, therefore, no…

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