Background of Case

An Income Tax Return (ITR) was filed by Sanjay Pratap Singh for the Assessment Year 2009-10, indicating the following:

• Salary Income: Rs. 9,92,492
• Other Income: Rs. 2,02,706
• Total Declared Income: Rs. 10,92,498

When the return was checked by the department (just as basic without detailed inspection), it was initially processed normally under Section 143(1) of the Income Tax Act.

What Triggered the Dispute?

On March 28, 2016, the Assessing Officer (AO) issued a notice under Section 148 to reopen the assessment because a mismatch was noticed between the salary declared by Sanjay and the salary reflected in Form 26AS.

• Form 26AS is a tax credit statement showing how much Tax Deducted at Source (TDS) was deducted on your behalf and reported by the deductor (like your employer).

What the AO Found During Reassessment

When Form 26AS was reviewed by the Assessing Officer (AO) during the reassessment, he found:

• Form 26AS had some duplicate TDS entries, which wrongly made it look like he earned more than he actually did.
• When the duplicate entries were removed, the actual mismatch was just of Rs. 1,926.
• The Assessing Officer (AO) still made additional additions based on some other entries found in the books of “related parties,” claiming they should be taxed in Sanjay’s hands too.

Appeal Before CIT(A)

Sanjay appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who ruled:

• Reopening the case was invalid because Form 26AS alone, especially with errors, is not strong/tangible evidence.
• There was no valid reason to believe that Sanjay had hidden any income.
• The AO should not have assumed jurisdiction based on weak assumptions.
• All additions were deleted, and the penalty imposed was also cancelled.

ITAT’s View

The Revenue (Income Tax Department) raised objections to the CIT(A)’s order before the Income Tax Appellate Tribunal (ITAT).

The ITAT agreed with CIT(A) and said:

• There was no new or authentic material that indicated income was hidden.
• The AO simply acted on an error in Form 26AS, which is not acceptable under law.

Delhi High Court’s Final Judgment

The Revenue Department took the matter to the Delhi High Court, arguing that:

• ITAT relied wrongly on past Supreme Court and High Court judgments (Kelvinator, Orient Craft).
• Form 26AS was enough evidence to reopen the case.

But the High Court dismissed the Revenue’s appeal, saying:

• No substantial legal question arises; both CIT(A) and ITAT had correctly assessed the facts about the case.
• Form 26AS had visible mistakes (duplicate entries), so it could not be treated as “tangible material” to reopen the assessment.
• A mismatch of Rs. 1,926 after correction doesn’t justify a reassessment.
• Even though scrutiny was not initially done, that doesn’t allow the AO to reopen without valid material.
• The case cited by Revenue (Indu Lata Rangwala) does not support their position, as even in such cases, valid material is needed

Final Decision:

The Delhi High Court has dismissed the appeal, meaning:

• Sanjay Pratap Singh has won the case before the ITAT was upheld.
• The assessment order and penalty imposed by the AO were dismissed.
• All pending applications were also disposed of.