Reassessment cannot be based solely on reasons borrowed from other departments or reports

Balaji Mines And Minerals Pvt Ltd Vs ACIT (Bombay High Court)

In the case of Balaji Mines And Minerals Pvt Ltd vs ACIT, the Bombay High Court ruled that the reassessment cannot be based solely on reasons borrowed from other departments or reports, such as the Justice M.B. Shah Commission Report. The court held that the Assessing Officer failed to independently form opinions apart from what was borrowed from the report, which is essential for validly reopening an assessment.

The petitioners challenged the notice under Section 148 of the Income Tax Act, which was based on reasons related to under-invoicing of exports and income arising from illegal activities. These reasons were primarily drawn from the Justice M.B. Shah Commission Report. However, the court found that the Assessing Officer did not provide any independent reasoning or material to support the reopening of the assessment.

The court emphasized that reasons for reopening must have a live link and tangible material to justify their validity. In this case, the court concluded that the reasons lacked independent inquiry and were merely borrowed from other authorities without further reasoning.

Therefore, the court quashed and set aside the notices and orders rejecting objections filed by the petitioners, stating that they lacked valid reasons for reassessment.

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