SLP dismissed reopening invalid as AO relied solely on DRI information without independent application of mind {Assistant Commissioner of Income-tax vs. Tungabhadra Minerals (P.) Ltd. [2025] 179 taxmann.com 255 (SC)}
Facts:
Assessee company was issued a notice for reopening of assessment under Section 148 of the Income Tax Act. The Assessing Officer (AO) relied solely on information received from the Directorate of Revenue Intelligence (DRI) alleging under-invoicing of exports. The AO did not make any independent inquiry or apply his own mind before initiating the reopening proceedings.
Issue:
Whether reopening of assessment is valid when the AO acts only on information received from another department (like DRI) without forming his own belief or conducting independent verification.
Held:
The reopening was held invalid. The Court observed that the AO must form an independent “reason to believe” that income has escaped assessment. Merely reproducing or relying on external information without applying one’s own mind is not sufficient. Since the AO acted mechanically on DRI information, the reopening was invalid. The Supreme Court dismissed the Revenue’s SLP, affirming that such reassessments cannot be sustained.
