LI Network
Published on: November 19, 2023 at 00:09 IST
The Delhi High Court, in a recent ruling, declared the reassessment notice issued by the Assessing Officer (AO) as null and void, stating that the AO lacked tangible material to support the belief that income, chargeable to tax, had escaped assessment.
The bench, consisting of Justice Rajiv Shakdher and Justice Girish Kathpalia, asserted that the AO did not exhibit due diligence while initiating the reassessment proceedings against the petitioner or assessee.
The AO initiated assessment/reassessment proceedings for the Assessment Year (AY) 2011-12 through a notice issued on March 31, 2018, under Section 148 of the Income Tax Act.
The court observed that the AO relied on information received from the Income Tax Officer (Nahan) and an FIR and chargesheet filed by the Central Bureau of Investigation (CBI) without furnishing the relevant details to the petitioner.
The petitioner argued that it seemed to be a case of “borrowed satisfaction” as the AO failed to independently verify the information and material in his possession.
The department contended that the petitioner did not respond to the communication dated March 20, 2018, compelling the AO to initiate reassessment proceedings.
The court, however, noted that the AO lacked tangible material to form the belief that income, chargeable to tax, had escaped assessment.
The language used by the AO indicated a mere suspicion rather than a grounded belief, violating the established principle that suspicion and conjecture cannot be the basis for initiating reassessment proceedings against an assessee.
The court emphasized that the AO’s approach did not adhere to the necessary diligence required in such proceedings. Consequently, the reassessment notice was quashed.
Case Title: Saraswati Petrochem Pvt. Ltd. Versus Income Tax Officer
