Allowing the appeal of the assessee the Tribunal held that reason to believe must have a material bearing on the question of escapement of income. It did not mean a purely subjective satisfaction of the assessing authority, such reason should be held in good faith and could not merely be a pretence. Furthermore, the reasons to believe must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Assessing Officer and the formation of belief regarding escapement of income. The powers of the Assessing Officer to reopen an assessment though wide are not plenary. The words of the statute are “reason to believe” and not “reason to suspect”. The words “reason to believe” suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the ITO may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The ITO would be acting without jurisdiction if the reason for his belief that the conditions are satisfied did not exist or is not material or relevant to the belief required by the section.(AY.2010-11)