In a recent decision, the Delhi High Court ruled that the Assessing Officer’s (AO) reassessment notice was invalid since the AO could not produce any concrete evidence to substantiate its claim that income that was subject to taxation had not been assessed. The bench, which was made up of Justices Girish Kathpalia and Rajiv Shakdher, claimed that the AO had not acted with due diligence when it began the reassessment process against the petitioner or assessee.
Through a notification published on March 31, 2018, the AO began assessment and reassessment proceedings for the Assessment Year (AY) 2011–12 in accordance with Section 148 of the Income Tax Act. The Central Bureau of Investigation (CBI) filed a FIR and chargesheet, and the AO relied on information from Nahan, the Income Tax Officer, the court said, without providing the petitioner with the necessary details.
The petitioner contended that since the AO did not independently verify the data and materials in his possession, it appeared to be a case of “borrowed satisfaction.” According to the department, the petitioner failed to reply to the March 20, 2018, communication, which prompted the AO to start the reassessment process.
The court did point out that the AO did not have any concrete evidence to support the notion that tax-chargeable income had evaded assessment. The AO violated the established principle that suspicion and conjecture cannot be the basis for launching reassessment proceedings against an assessee, since the language employed suggested a mere suspect rather than a firm belief. The AO’s strategy did not follow the requisite attention required in such procedures, the court stressed. As a result, the notice of reassessment was nullified.
