AO issued reopening notice and upon recording reasons to believe, the assessment order was passed by making no addition. The PR. CIT issued show cause notice u/s 263 that it was a case under section 40A(3) as cash withdrawals by the assessee was used for purchasing inventory. The Hon’ble Delhi High Court affirmed the order of the ITAT by observing that if the AO did not bring to tax the amount that was adverted to in the “reason to believe” framed in the first instance, then the PR. CIT could not have triggered proceedings for cash withdrawals under Section 263 of the Act. Hence, the appeal was closed. (AY. 2006-07)