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The Delhi bench of ITAT in 107ITR( Trib) (SN) 93 encountered non-resident’s case reopening on irrelevant considerations.

In the reasons it is alleged by the AO that the non resident assessee has not filed return of income even when it had filed TDS return with respect to payments u/s195/194E.

To the contrary the assessee filed objections stating clearly that it had not filed any TDS returns as it had not remitted any payments outside India.

Instead of dropping the case the AO framed a draft assessment for the approval of DRP even when admitting to the error in writing about non-filing of TDS return in reasons for reopening.

Both the higher authorities, additional commissioner and

Commissioner mechanically granted sanction for issue of notice in this case.

Even the DRP did commit the same error and declined to interfere with the action of the AO. It also referred to non-filing of TDS return and related transactions as reasons for reopening omitting to note that the AO, while disposing of the objections of the assessee has admitted to errors committed by him.

In taking strong note of such non-existent and irrelevant facts the tribunal in so many words pointed out that a more cautions approach is required to be adopted in granting sanction for the issue of notice for reopening.

While writing all of this as totally unacceptable the bench issued a stern reminder on the motive and concept of approval under Section 151 of the Act by the higher authorities in the matter of reopening of assessment under Section 147 of the Act as only for the purposes of putting a safeguard against any arbitrary or highhanded exercise of power by the AO while reopening of assessment under Section 147 of the Act. Therefore, the burden casts on the approving authority is onerous, as, based on the reasons recorded by the AO for reopening of assessment, approving authority has to find out whether a case for reopening of assessment is made out.

Under section 148A this onerous burden is imported in the Act as now it is for the AO and the sanctioning  authority to decide, on the basis of material available, whether or not it is a fit case to issue notice under section 148.

Thus if the notice had any manifest error any action taken thereupon which is adverse to Assessee is liable for questioning

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