During the assessment proceedings for 2012-13, the Assessing Officer wanted to enquire about the share premium shown in the books of accounts. However, the assessee replied that no share premium was received during the assessment year under consideration, and the same was issued in the earlier assessment years 2009-10. Accordingly, the AO issued a notice under section 148 of the Act that the share premium received by the assessee has escaped assessment.

The Tribunal noted that the Assessing Officer had no reliable information or tangible material to form the belief that the assessee’s income for the year under consideration has escaped assessment, as the same was bogus or was not genuine. Mere information given in the subsequent years for issuance of shares at a premium will not constitute any tangible material (information) and cannot be said to be a reason to form the belief that the assessee’s income has escaped assessment. In this case, the Assessing Officer has made a wild suspicion regarding the escapement of income without any information in his hand regarding escapement of income. The suspicion of the Assessing Officer was not based on any reliable information or tangible material coming to his possession in this respect. There is no dispute to the well-settled proposition of law that reason to believe must have a material bearing on the question of escapement of income. It does not mean a purely subjective satisfaction of the assessing authority; such reason should be held in good faith and cannot merely be a pretence. (AY. 2009-10)