Ravi Chopra Vs ITO (ITAT Delhi)
Delhi ITAT Quashes Reassessment for ‘Reason to Suspect’ – Cash Deposits Alone Can’t Justify Reopening
The Delhi ITAT quashed a reassessment initiated merely on the basis of large cash deposits and information received from the Investigation Wing, holding that the Assessing Officer had only a “reason to suspect” and not a legally sustainable “reason to believe” that income had escaped assessment. The Tribunal observed that the AO himself recorded that there were “high chances” of escapement of income requiring scrutiny, which clearly indicated a fishing and roving enquiry rather than formation of an independent belief based on tangible material. Relying on landmark rulings including Kelvinator India Ltd., Meenakshi Overseas, RMG Polyvinyl and Rustagi Engineering, the Tribunal held that reopening based merely on investigation wing inputs without independent enquiry amounts to borrowed satisfaction and is invalid in law.
The Tribunal further quashed the assessment on an additional jurisdictional defect — the mandatory notice under section 143(2) was issued for AY 2010-11 instead of AY 2011-12, whereas the reassessment order was passed for AY 2011-12. Rejecting the department’s argument that it was a mere typographical error, the ITAT held that absence of a valid notice u/s 143(2) strikes at the root of jurisdiction and renders the reassessment void. Following Laxman Das Khandelwal, Hotel Blue Moon and Staunch Marketing Pvt. Ltd., the entire assessment framed u/s 143(3) r.w.s. 147 was quashed
FULL TEXT OF THE ORDER OF ITAT DELHI
