Based on the information received from the Investigation Wing, Kolkata, the Assessing Officer initiated reassessment proceedings upon the assessee.

The Tribunal observed that even though the information received from the Investigation Wing would constitute fresh material in the hands of the Assessing Officer for initiation of reassessment proceedings, the same would only become ‘reason to suspect’ and not ‘reason to believe’ that the income of the assessee has escaped assessment. The Ld. Assessing Officer cannot be carried away by the information received from the Investigation Wing and consider the same as sacrosanct. The Assessing Officer ought to have undertaken preliminary examination of the contents of information received from the Investigation Wing.

Accordingly, the Tribunal held that the reassessment proceedings initiated under section 147 of the Act are liable to be quashed because the said proceedings were initiated based on vague information received from Investigation Wing, Kolkata which only gives reason to suspect and not reason to believe. Also no preliminary examination of the contents of the information received from the Investigation Wing was undertaken and no corroborating evidences were brought on record by the Ld. Assessing Officer so as to prove that the income of the assessee has escaped assessment.

This judgment was rendered under the erstwhile reassessment scheme. However the said judgment may be made applicable to the new reassessment scheme. Under the new reassessment scheme too, the Assessing Officer is duty bound to carry out preliminary examination of information received from Investigation Wing by virtue of clause (a) of section 148A so as to find out that whether the said information suggest escapement of taxable income in terms of section 147 of the Act.