PR. COMMISSIONER OF INCOME TAX-7, DELHI vs. SHREE BALKISHAN AGARWAL GLASS INDUSTRIES LTD

It becomes pertinent to note that although the initiation of reassessment had been upheld by the Commissioner of Income Tax (Appeals)2, the Tribunal has on an overall consideration of the facts as placed before it, come to fault the initiation of action under Section 148 of the Income Tax Act, 19613 itself. 3. It becomes pertinent to note that insofar as the validity of commencement of reassessment was concerned, the CIT(A) had rendered the following findings: “2.6 Thus, all these decisions have clearly stated that where specific information is received by AO from the investigation wing and the AO applies his mind on such information and forms a reason to believe that income has escaped assessment, then reopening of the assessment will be a valid reopening. Considering above and taking the fact into consideration that the A.O. has issued the notice under section 148 after obtaining the statutory approval of the JCIT. Further the A.O. has also duly disposed the objection of the appellant against issue of notice vide order dated 07.11.2012, hence it is held that the case under consideration has been duly reopened after complying the provision of section 147 to 151 of the Act and order under section 147/143(3) dated 28.03.2013 is a legally valid order . Accordingly the additional ground and the ground no 1 to 4 taken by the appellant is dismissed.”

The Tribunal has, however, taken note of a discrepancy appearing in the format which was prepared for the purposes of obtaining approval and where the Assessing Officer4 had made a disclosure that no return had been filed. Undisputedly, a return filed along with audited account statements had been submitted for the concerned Assessment Year5.

Thus, even if we were to proceed on the basis that the recital appearing under serial 7 of the format was a typographical error, we are still faced with the following conclusion recorded by the Tribunal: “25. A perusal of the above shows that at clause 7(a) the AO has categorically mentioned that no return has been filed by the assessee. However, a perusal of the paper book page 1 shows that the assessee has duly filed its return of income on 31.3.2006 declaring total loss of Rs.2,79,76,596/- vide receipt number 0851001128. A perusal of Page 3 of the paper book shows that the return was processed under section 143(1) on 26th July 2006. Thus, it is seen that the AO had no occasion to go through the return filed by the assessee along with the audited accounts before recording reasons and has mentioned that no return has been filed while reopening the assessment and the ld. Addl. CIT, without application of mind, has simply mentioned, “I am satisfied that this is a fit case for issue of notice under section 148.” The Hon’ble Bombay High Court in the case of Kalpana Shantilal vs ACIT 100 CCH 0165 has held that sanction granted by higher authority for issuing of reopening notice had to be on due application of mind and it could not be mechanical approval without examining proposal sent by AO. The Hon’ble Delhi High Court in the case of Yum Restaurants Ltd. vs Dy. Director of Income Tax 99 CCH 232 has held that where authorities appear to have concurred with reasons for reopening assessment without applying their mind, reopening of assessment would be invalid. The Hon’ble Bombay High Court in the case of Ankita A. Choksey vs. Income Tax Officer And Others (2019) 411 ITR 207 (Bom) has held that condition precedent for issue of notice for reassessment is that the reasons to believe that income has escaped assessment must be based on correct facts. Notice based on wrong facts is without jurisdiction and has to be quashed. The Delhi Bench of the Tribunal in the case of DCIT vs. M/s KLA Foods (India) Ltd. and Others, vide ITA No.2846/Del/2015, order dated 8th April 2019, has held that condition precedent for issue of notice for reassessment is that reason to believe that income has escaped assessment must be based on correct facts. Notice based on wrong facts is without jurisdiction and is to be quashed. The Hon’ble Delhi High Court in the case of PCIT vs. M/s SNG Developers Limited, 404 ITR 312, has held that condition precedent for issue of notice for reassessment is that the reason to believe that income has escaped assessment must be based on correct facts. Notice based on wrong facts is without jurisdiction and has to be quashed. The above decision of the Hon’ble High Court was challenged by the Revenue before the apex court and the apex court dismissed the SLP vide SLP No.42379/2007, order dated 9th February 2018. Since, in the instant case, although the assessee has filed return of income which This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:15:21

It is thus, apparent that the Tribunal found that notwithstanding what was described to be a typographical error, the AO had failed to rest its opinion on a perusal of the return or the audited accounts which had been filed. Thus, viewed from that angle, as well as what came to be recorded by the CIT(A), and which too stood restricted to an investigation report as opposed to an independent application of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 14:15:21