Facts of the Case

The assessee, Sanjay Pratap Singh, filed his return of income for Assessment Year 2009–10 on 25.07.2009 declaring total income of ₹10,92,498/-, comprising salary income and income from other sources. The return was processed under Section 143(1) of the Income-tax Act, 1961.

On 28.03.2016, the Assessing Officer issued a notice under Section 148 seeking to reopen the assessment solely on the ground of mismatch between salary income disclosed in the return and the salary reflected in Form 26AS. During reassessment proceedings, it emerged that Form 26AS contained duplicate TDS entries, which had inflated the TDS figures. After removing the duplicate entries, the Assessing Officer found a marginal difference of ₹1,926/- and made addition to that extent, along with certain further additions based on entries in the books of related parties.

The assessee challenged the reassessment order dated 29.12.2016 before the Commissioner of Income Tax (Appeals), who quashed the reassessment holding that there was no tangible material to justify reopening. The Income Tax Appellate Tribunal affirmed the order of the CIT(A). Aggrieved, the Revenue filed an appeal before the Delhi High Court under Section 260A.

Issues Involved

Whether apparent errors and duplicate entries in Form 26AS constitute tangible material for forming a “reason to believe” that income has escaped assessment under Section 147, and whether reassessment proceedings initiated solely on such basis are sustainable in law.

Petitioner’s Arguments (Revenue)

The Revenue contended that Form 26AS showed higher TDS than salary income disclosed, which constituted tangible material justifying reopening of assessment. It was argued that since the return had not been scrutinized earlier under Section 143(3), the extended limitation period applied and sufficiency of material could not be examined at the stage of reopening. Reliance was placed on judicial precedents including Indu Lata Rangwala.

Respondent’s Arguments (Assessee)

The assessee argued that Form 26AS itself contained obvious and apparent errors in the form of duplicate entries, which could not constitute tangible material. It was submitted that reopening based on such erroneous data amounted to assumption of jurisdiction without valid reasons and was contrary to settled law laid down in Kelvinator of India and Orient Craft.

Court Order / Findings

The Delhi High Court held that apparent errors visible on the face of Form 26AS could not constitute tangible material for reopening assessment. The Court observed that duplicate entries in Form 26AS were self-evident and once eliminated, the alleged mismatch was negligible. Such material could not reasonably form the basis for a belief that income had escaped assessment.

The Court clarified that although the concept of “change of opinion” may not apply where the return was processed under Section 143(1), the requirement of tangible material remains mandatory. Material which is ex facie erroneous or unreliable cannot satisfy the statutory threshold under Section 147.

The Court rejected the Revenue’s reliance on Indu Lata Rangwala, holding that the said decision does not support reopening on material that does not genuinely indicate escapement of income.

Important Clarification

The Court clarified that Form 26AS, if containing patent errors or duplications, cannot by itself be treated as reliable tangible material for reopening assessment. Jurisdiction under Section 147 cannot be assumed on the basis of defective or erroneous data without independent application of mind.

Final Outcome

The appeal filed by the Revenue was dismissed. The Delhi High Court upheld the orders of the CIT(A) and the Income Tax Appellate Tribunal, holding that the reassessment proceedings initiated on the basis of erroneous Form 26AS data were invalid and unsustainable in law. All pending applications were disposed of accordingly.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769677049_PR.COMMISSIONEROFINCOMETAX15DELHIVsSANJAYPRATAPSINGH.pdf

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