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Issues: Whether the reassessment notice and the consequent reassessment were valid where the Assessing Officer relied on a declaration made under the Voluntary Disclosure of Income Scheme, 1997 but the tax on the declaration had not been paid.
Analysis: The material before the Assessing Officer consisted of the VDIS declaration and the accompanying affidavit showing jewellery acquired in earlier years. The Court found that the declaration itself disclosed that the assets related to years other than the assessment year in question. On these facts, there was no independent material to show that income had escaped assessment for the relevant assessment year. Reopening based only on the accepted declaration and without a live link between the material and the formation of belief would amount to an attempt to verify or investigate already available information rather than to act on reason to believe that taxable income had escaped assessment.
Conclusion: The reassessment was held to be invalid, and the Revenue's challenge failed.
Final Conclusion: The assessment was not reopened on a sustainable jurisdictional basis, so the cancellation of the reassessment was upheld.
Ratio Decidendi: Reassessment cannot be founded merely on a VDIS declaration showing acquisition of assets in earlier years unless the material has a live nexus with escapement of income in the relevant assessment year.
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