2023 (9) TMI 842 - DELHI HIGH COURT

Reopening of assessment - Reason to believe - recorded in the reasons to believe i.e., that ROI had not been filed by the petitioner - reasons to believe recorded by the AO have strangely also received the approval of the superior i.e., the Principal Commissioner of Income Tax (PCIT) - HELD THAT:- As a matter of fact, because the AO proceeded on a factually erroneous ground, he also took recourse to CBDT Instruction No. 14/2013, dated 23.09.2013, which framed the Standard Operation Procedure (SOP) in the cases concerning non-filers i.e., those assesses who have not filed returns.

Furthermore, we find that in the ROI, the petitioner has disclosed, not only the investments made, but also the amount earned as interest.

The amount which the assessee has disclosed by way of Investment is Rs. 10,74,800/-. Likewise, insofar as the interest is concerned, the amount disclosed in the ROI is Rs. 1,23,857/-. The gross receipts noted in the ROI is the figure that is noted in the reasons to believe, which is shown as Rs. 2,93,11,115/-.

Therefore, the petitioner was entitled to contend that, not only the contractual receipts were disclosed, but also the investment in debentures/bonds amounting to Rs. 5 lakhs and the interest earned, also formed part of its ROI.

Thus the reasons to believe are the foundation on the basis of which the reassessment proceedings can be triggered against any assessee. Once the foundation is removed, the entire edifice would axiomatically collapse.

In this case,the foundation was completely absent. The AO’s reason to reopen the assessment proceedings was founded on an erroneous fact, which was that the petitioner had possibly not filed its ROI. The record has shown the contrary. Therefore, the reassessment proceedings will crumble. WP allowed.