![]() One must go through the entire judgement word to word before quoting at any place. In the same way an Assessing Officer must have first reason in the form of material which comes to his knowledge, information, and his faith on the escapement of income and these two things make him to go ahead and he reopens the case u/s 147 by issuing a notice u/s 148 within time limit u/s 149.įollowing are judgement of the various courts, tribunals on the text “Reason to believe”. The belief of the doctor is faith on his decision to cure the patient. And that belief prompts him to make surgery upon the patient and his belief cures the patient. Now before the doctor, the ailment, his test reports, and its cause of illness and the presence of the patient ,conducting certain tests on the body of the patient is the reason and further what comes to the mind of the Doctor is the formation of his belief that the patient will be cured. Before a qualified doctor a patient comes for treatment. Now text is understood by a simple example. The Assessing Officer must form a prima facie opinion based upon expressed statement and definite and relevant material in his possession. The words “has reason to believe” are stronger than the words “is satisfied”. The expression “has reason to believe” is a very strong and important condition. It was also held that such justification for his belief is not to be judged from the standards of proof required for coming to a final decision and at the stage where he finds cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter based on any judicial or quasi judicial enquiry. It was held that the word ‘reason’ in the phrase ‘reason to believe’ would mean cause or jurisdiction and if the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. “Change of Opinion” in the mind of Assessing Officer on interpretation of law or on facts cannot be basis for forming “Reason to Believe”. Belief must be that of Assessing Officer. Belief must not be based on suspicion, gossip or rumors. Reason must be good in faith and must have rational connection with the relevant grounds. Reason to believe does not mean “reason to suspect”. Reason to believe is stronger than “is satisfied”. The existence of tangible material is necessary. There must be reason to believe that income chargeable to tax has escaped assessment. Evidence in possession of Assessing Officer that the assessee has claimed excessive loss/deduction, allowances, reliefs.Evidence in possession of Assessing Officer that the assessee has understated his income.The expression ‘reason to believe’ occurring in section 147 does not means a purely subjective satisfaction on the part of the ITO, the reasons for the belief must have a rational connection or relevant bearing to the formation of the belief.įollowing Constitutes reasons to believe for invoking section 147: Belief may be subjective but reason is objective. When it is said that reason to believe is not open to scrutiny what is meant is that the satisfaction arrived at by the officer concerned is immune from challenge but where the satisfaction is not based on any material or it cannot withstand the test of reason, which is an integral part of it, then it falls through and the court is empowered to strike it down. But, the reason due to which the decision is reached can always be examined. The belief may not be open to scrutiny as it is the final conclusion arrived at by the officer concerned, as a result of mental exercise made by him on the information received. Before the officer has faith or accepts a fact to exist there must be a justification for it. The word “reason” means cause or justification and the word “believe” means to accept as true or to have faith in it. ![]() ![]() It is made of two words “reason” and “to believe”. It has been considered to be the most salutary safeguard on the exercise of power by the officer concerned. “Reason to believe” is a common feature in taxing statutes. –īelief may be subjective but reason is objective To this limited extent, the action of the Assessing Officer in starting proceeding under section 147 is open to challenge in a court of law. It is open to the court to examine whether the reason for the belief and are not extraneous or irrelevant to the purpose of the section. The belief must be held in good faith, it cannot be merely a pretence. The expression ‘reason to believe’ in section 147 does not mean purely subjective satisfaction on the part of the Assessing Officer. Reason to believe does not mean a purely subjective satisfaction on the part of the ITO Section 147 of the Income tax Act, 1961 and explanation of the text ‘Reason to Believe’
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