Rakesh Gupta v. CIT (2018) 405 ITR 213 / 303 CTR 670/167 DTR 265/101 CCH 318 (P&H) (HC)

S.147: Reassessment — Client code modification -Information from investigation wing regarding evasion of tax by assessee —Notice is held to be valid .[ S. 133A,148 ]

Dismissing the petition the Court held that ;that there was a direct nexus or live link between the material coming to the notice of the Assessing Officer, namely, the material submitted by the Investigation Wing, and the formation of the Assessing Officer’s belief that there has been escapement of income. Details of the client code modification were furnished in the information. The information was in respect of several brokers. The information pertaining to the assessee’s broker was culled out and tabulated. There were 74 cases of the assessee’s broker having modified the assessee’s transactions. The information was directly on the issue of the transactions. It could not by any stretch of imagination be said to be vague, indefinite or distant. Reasons to believe were there. The reasons were based on tangible material. The return and account books of the assessee had not undergone scrutiny at the time of assessment. The information was specific and not vague. A reasonable person could form an opinion on the basis of the material. The information received could form the basis of reason to believe that income had escaped assessment and the reopening was not on mere suspicion. Hence, the assumption of jurisdiction was in accordance with law. ( AY.2009 -10)