Revenue Cannot Use Reassessment Powers as a Review Mechanism

Aarti Fabricott Private Limited Vs ITO (Delhi High Court)

The case of Aarti Fabricott Private Limited vs ITO revolves around the legality of reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961. The petitioner, Aarti Fabricott Pvt Ltd, challenged the reopening of its assessment for the Assessment Year 2017-18 based on a notice issued by the Income Tax Officer (ITO).

The core issue before the Delhi High Court was whether the Income Tax Officer had sufficient grounds (“reasons to believe”) to initiate reassessment proceedings against Aarti Fabricott Pvt Ltd. The court examined the timeline of events, starting from the initial notice under Section 148 issued in June 2021, which was later quashed by the court in another case.

The petitioner argued that the subsequent corrigendum issued by the respondents lacked substantive reasons and amounted to a mere change of opinion, which is not permissible under the law for reopening assessments. The court analyzed previous judgments, including Manmohan Kohli v. ACIT and Union of India & Others v. Ashish Agarwal, to assess the validity of the reasons provided by the ITO.