Low NP Isn’t “Reason to Believe” – Reopening Quashed & Estimation Dies with It

Shamim Ahmad Vs ITO (ITAT Delhi) ITAT Delhi allowed the assessee’s appeal for AY 2012-13 in Shamim Ahmad, quashing the entire reassessment u/s 147/148 where reopening was triggered solely on the ground of low net profit. The AO reopened the case because the assessee, a livestock trader, declared NP @ 0.28% against 2% in comparable cases, and thereafter made an addition by estimating NP @ 2% on turnover of ₹19.53 crore. The Tribunal held that low profitability by itself is not tangible material and cannot constitute “reason to believe”. There was a complete absence of live nexus between...