2026 (4) TMI 171 - AT - Income Tax

Reassessment based on an incorrect factual premise is void when reopening and approval rest on non-existent non-disclosure.

Reassessment was invalid because the recorded reasons and sanction under section 151 proceeded on the mistaken premise that the assessee had not filed a ... Validity of reassessment reasons - Jurisdictional defect in reopening - Erroneous assumption in recorded reasons - Reopening without jurisdiction - the recorded reasons and approval proceeded on the factual premise stated that the assessee had not filed a return of income, though the return had in fact been filed and the capital gains transaction had already been disclosed therein - assessee argued ex-parte assessment completed HELD THAT: - The Tribunal held that the matter need not be remitted merely because the assessment and first appellate orders were ex parte, since the jurisdictional defect was apparent on the material already placed on record. The return filed by the assessee before initiation of reassessment showed that the transfer transaction had been disclosed on the basis of the stamp duty valuation. The approval for reopening, however, was obtained on the contrary assumption that no return had been filed. As the very reasons recorded for reopening rested on a factually incorrect foundation, the reopening was held to be vitiated and void ab initio. [Paras 6, 7] The challenge to reopening was accepted; the reassessment was held to be void ab initio on account of factually erroneous recorded reasons, and the remaining grounds were left unadjudicated. Final Conclusion: The Tribunal partly allowed the appeal by accepting the jurisdictional ground against reopening. Since the recorded reasons wrongly assumed non-filing of return despite prior disclosure of the capital gains transaction, the reassessment was held invalid and the other grounds were not examined. Issues: (i) Whether the reassessment proceedings were valid when the recorded reasons and approval proceeded on the incorrect assumption that the assessee had not filed the return and had not disclosed the capital transaction.Analysis: The return of income and the computation showing disclosure of the property transaction were already on record. The reopening was initiated on the belief that no return had been filed, and the approval under section 151 was granted on that mistaken factual premise. Since the foundational facts for reopening were incorrect, the jurisdiction assumed for reassessment was vitiated. The matter did not require remand because the relevant material was already available on record and the defect went to the root of the reassessment.Conclusion: The reassessment was held to be invalid and the jurisdictional challenge was allowed in favour of the assessee.Final Conclusion: The appeal succeeded only on the reopening issue, while the remaining grounds were left undecided, resulting in partial relief to the assessee.Ratio Decidendi: Reassessment cannot be sustained where the reasons recorded and the approval for reopening rest on an incorrect foundational fact going to jurisdiction, rendering the proceedings void.