Case Law Details
Someshwar Nandkishor Tapde Vs ITO (ITAT Pune)
Pune ITAT Quashes Reassessment Based on Vague Search Information and Deletes ₹51.35 Lakh Addition
Summary: The assessee appealed against the order of the Commissioner of Income Tax (Appeals) for AY 2017-18 arising from an assessment under sections 147 read with 144B. The assessee contended that the notice under section 148 was issued solely on the basis of vague information allegedly based on Mr. Sachin Nahar’s statement, without identifying the alleged lenders, dates, terms, seized documents, or any statement specifically linking the assessee to the alleged cash loan of ₹50,00,000. The assessee also filed an affidavit denying any acquaintance with Mr. Sachin Nahar, lodged a police complaint, sought copies of relied-upon documents and cross-examination, and challenged the addition of ₹51,35,000. The Tribunal examined the recorded reasons and found that they contained only a general allegation without naming the alleged lenders, referring to any seized or impounded documents, citing any statement of Mr. Sachin Nahar, or explaining the basis for the alleged loan amount. It held that the Assessing Officer had not applied his mind, that the approval was mechanical, and, following the cited Delhi and Bombay High Court decisions, quashed the notice issued under section 148. It further directed deletion of the addition of ₹51,35,000 as no supporting material had been brought on record, and allowed the appeal.
Pune ITAT quashed the reassessment proceedings initiated against the assessee after holding that the reasons recorded under section 148 were based merely on vague information received from the Investigation Wing without any independent application of mind by the Assessing Officer.
The reopening was triggered solely on the basis of an alleged statement of one Mr. Sachin Nahar, who was said to have acted as a broker for cash loans. The reasons recorded merely alleged that the assessee had obtained a cash loan of ₹50 lakh through him and paid interest of ₹1.35 lakh, but did not disclose the identity of the alleged lender, the dates of the transactions, any seized document, or even the specific statement relied upon. The Tribunal observed that the reasons lacked any live nexus between the information received and the formation of belief that income had escaped assessment, rendering the reopening legally unsustainable.
Relying on the decisions of the Delhi High Court in Well Trans Logistics India (P.) Ltd. and the Bombay High Court in Shodiman Investments (P.) Ltd., the Tribunal reiterated that an Assessing Officer cannot reopen an assessment on borrowed satisfaction or vague investigation inputs. There must be independent enquiry and tangible material establishing a rational connection between the information received and the belief of escapement of income.
On merits also, the Tribunal found that the assessee had consistently denied knowing Mr. Sachin Nahar, had filed an affidavit and even lodged a police complaint alleging misuse of his name. Despite this, the Revenue failed to produce any seized document, statement, or corroborative evidence linking the assessee with the alleged cash loan transaction. The addition of ₹51.35 lakh was therefore held to be without any supporting material and was directed to be deleted.
Cases Discussed
1. Well Trans Logistics India (P.) Ltd. Vs. Addl. Commissioner of Income-tax, [2024] 166 taxmann.com 72 (Delhi)
2. ITO Vs. Narendra Samptalal Bafna, ITA No. 688/PUN/2024, order dated 19.08.2024
3. Sagar Construction, ITA No. 1812/PUN/2025, order dated 08.01.2026
4. Principal CIT-5 vs. Shodiman Investments (P.) Ltd., [2020] 422 ITR 337 (Bombay)
5. Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers (P.) Ltd., [2007] 161 Taxman 316/291 ITR 500 (SC)
6. ITO v. Lakhmani Merwal Das, [1976] 103 ITR 437
7. S. Narayanappa v. CIT, [1967] 63 ITR 219
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2017-18 on 24.09.2025, emanating from the Assessment Order u/s 147 r.w.s. 144B of the Act, dated 21.03.2022.
2. Submission of Ld. AR:
The Ld. AR filed an elaborate paper book. The Ld. AR submitted that during the AY 2017-18, the assessee was a minor in part of the AY 2017-18 and was studying in 12th standard. The Ld. AR further submitted that subsequently the assessee started studying engineering. The Ld. AR submitted that notice u/s 148 of the Act issued to the assessee is bad in law as it is issued only on the basis of some vague information and alleged statement of Mr. Sachin Nahar. The Ld. AR took us through the reasons recorded for reopening which are at page Nos. 4 to 7 of the paper book filed by the assessee. The Ld. AR submitted that in the reasons recorded it is mentioned that the Assessing Officer (AO) received information on INSIGHT Portal of Income Tax Department wherein Mr. Sachin Nahar admitted that various parties have taken loans from other parties and he was broker in the transactions. In the reasons recorded for reopening it is alleged that Someshwar Nandkishor Tapde has taken loan from various parties through Mr. Sachin Nahar of Rs.50,00,000/-.
2.1 The Ld. AR submitted that in the entire reasons recorded for reopening, nowhere names of the persons have been mentioned who has allegedly provided loan to the assessee. Thus, it is not clear from the reasons who provided loan, dates of loan, amount and terms of loan. Nowhere in the reasons recorded there is any reference to any seized documents seized during the search in the case of Mr. Sachin Nahar wherein specific loan given to the assessee, Someshwar Nandkishor Tapde appears. In the reasons recorded there is no reference to any answer given by Mr. Sachin Nahar during the search u/s 132 of the Act. Therefore, reasons recorded are vague based on hearse information. There is no application of mind by the AO on the impugned information uploaded on portal. Hence, reasons recorded are bad in law. Accordingly, notice is bad in law. The Ld. AR further submitted that the approving authority has also not bothered to verify the reasons before giving approval. Hence, approval is also bad in law.
2.2 On merits, the Ld. AR submitted that the assessee had filed an affidavit during assessment proceedings clearly stating that the assessee do not know any Mr. Sachin Nahar. During the assessment proceedings, the assessee requested the AO to provide copies of documents based on which it is alleged that loan was taken by the assessee. However, no copies of the documents have been ever provided to the assessee. The assessee was not permitted cross-examination of Mr. Sachin Nahar though the assessee had asked for it. The Ld. AR invited out attention to page Nos. 32 & 33 of the paper book which is copy of FIR lodged by the assessee during the assessment proceedings specifically alleging that some Mr. Sachin Nahar had given false information to Income Tax Department and Mr. Sachin Nahar is not known to the assessee. Copy of the said FIR was filed before the AO. Inspite of that the AO made addition of Rs.51,35,000/- which is unsustainable in law as addition is based on vague information which was never confronted to the assessee and the assessee has no connection with Mr. Sachin Nahar.
2.3 The Ld. AR further submitted that even for arguments it is considered that loan was taken by the assessee, loan can never be undisclosed income as loan is a liability and not income of the assessee. Therefore, the addition made is without application of mind without understanding the provisions of the Income Tax Act.
2.4 The Ld. AR relied on the decision of the Co-ordinate Bench of the Pune Tribunal in the case of ITO Vs. Narendra Samptalal Bafna in ITA No. 688/PUN/2024, vide order dated 19.08.2024 and in the case of Sagar Construction in ITA No. 1812/PUN/2025, vide order dated 08.01.2026.
3. Submission of Ld. DR:
The Ld. DR relied on the order of AO and the Ld. CIT(A).
4. Findings and analysis:
We have heard both the parties and perused the record. The reasons recorded for reopening are reproduced here as under :
“Reason for re-opening of the case of Shri Someshwar Nandkishor Tapde, for AY 2017-18 u/s 147 of the Act.
1. Details of assessee.
The assessee is residing at Motinagar Latur. On verification of records, it is noticed that during the year under consideration, the assessee was in receipt of amount which exceeds the threshold limit of maximum income not chargeable to tax, The nature of business activity of the assessee is not known as no return has been filed by the assessee for the year under consideration.
2. Brief details of information collected
In this case the information received from the ACIT Central Circle – 1(1), Pune. The ACIT CC 1(1) Pune through Insight Portal. The Information is as follow. In the case of Shri Sachin Nahar, search was carried out on 04.08.2017, wherein Shri Sachin Nahar has admitted that various parties have taken cash loans from other parties through him. Since he was a broker between these two parties, Shri Sachin Nahar has received commission for this transaction. The details of the parties who have taken cash loans have obtained from Shri Sachin Nahar.
Shri Someshwar Nandkishor Tapde who is the one of the assessee pertains to our charge has taken cash loan from various parties through Shri Sachin Nahar. Shri Someshwar Nandkishor Tapde has received cash loan an amount of Rs. 50,00,000/- and paid interest Rs. 1,35,000/- during the F.Y 2016-17 relevant A.Y 2017-18.
3. Analysis of information collected/received by the A.O:
On verification of information available on record it is seen that the assessee has received cash loan of Rs. 50,00,000/- and paid interest thereon at Rs. 1,35,000/- The assessee has not filed its return of income for the A.Y 2017-18. Hence an amount of Rs. 51,35,000/- has escaped assessment.
4. Enquiries made by the AO as sequel to information collected/received:
During the course of enquiry, the assessee has not offered any explanation regarding the sources of cash deposits. Further, no information is available on ITBA portal on ITS/360 degree profile.
5. Finding of the A.O:
Shri Someshwar Nandkishor Tapde has taken cash loan from various parties through Shri Sachin Nahar an amount of Rs. 50,00,000/- and paid interest Rs. 1,35,000/- during the F.Y 2016-17 relevant A.Y 2017-18. In this case return of income was not filed for the year under consideration. Therefore, provisions of explanation 2(a) to section 147 of the I.T.Act, 1961 are applicable in the present case. In this case the escapement amount is Rs. 51,35,000/-.
6. Basis of forming reasons to believe and details of escapement of income.
Since the assessee has received cash loan of Rs. 50,00,000/- and paid interest of Rs. 1,35,000/- but he had not filed return of income for A.Y. 2017-18, therefore, no processing/assessment was made which clearly shows failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment due to which the income of Rs. 51,35,000/- has escaped assessment within the meaning of explanation 2(a) to section 147 of the Income Tax Act, 1961. The assessee had received cash loan of Rs. 50,00,000/- in cash mode during the year therefore, the said amount is deemed income of the assessee u/s.69A of the Income Tax Act, 1961.
7. Details of Asset (including foreign asset).
From the analysis of information and documents, it is seen that there is no foreign asset disclosed by the assessee as no return of income filed by the assessee for the F.Y 2012-13.
8. Applicability of the provision of section 147/151 to the fact of the case.
In this case no return of income was filed for the year under consideration AY 2017-18 accordingly, in this case, no assessment was made and the only requirement to initiate proceedings u/s 147 is reason to believe which has been recorded above.
It is pertinent to mention here that in this case the assessee has chosen not to file return of income for the year under consideration although the total income of the assessee had exceeded the maximum amount which is not chargeable to tax as discussed in para above and the assessee was assessable under the Act. In view of the above, the provisions of clause (a) of Explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.
In this case less than four years have lapsed from the end of the assessment year under consideration, Hence, necessary sanction to issue notice u/s.148 is sought from the Addl. Commissioner of Income Tax, R-1, Aurangabad u/s. 151 of the Income Tax Act, 1961.
Latur.
Dt-25/03/2021
(Uday L. Joshi)
Income Tax Officer, Ward-1, Latur”
4.1 We have perused the reasons recorded which we have reproduced above. In this case, it is clearly mentioned in the reasons recorded for reopening that Mr. Sachin Nahar admitted that he had arranged loans from various persons to some other persons. It is alleged in the reasons that one of the person is Someshwar Nandkishor Tapde. Nowhere in the reasons it has been specifically mentioned the names of the person who has allegedly given loan to Someshwar Nandkishor Tapde, amount of loan given, dates of loan. Thus, there is no specific allegation in the reasons recorded. It is merely one vague sentence allegedly told by Mr. Sachin Nahar. Nowhere in the reasons recorded there is any reference to any seized document or impounded document wherein name of the assessee appears. Nowhere in the reasons recorded, the AO has referred to any statement of Mr. Sachin Nahar. The AO has not specified how he has arrived at a figure of Rs.50,00,000/- loan.
4.2 Therefore, on careful study of the reasons recorded for reopening, we are of the considered opinion that the AO has not applied his mind and reasons recorded are based on some vague information which is merely one sentence. Even the approving authority has not bothered to analyze the documents read the reasons before approving. Thus, the approval provided is also mechanical.
5. The Hon’ble Delhi High Court in the case of Well Trans Logistics India (P.) Ltd. Vs. Addl. Commissioner of Income-tax, [2024] 166 taxmann.com72 (Delhi) has held as under :
Quote, “24. We may note that the Assessing Officer after reproducing the information received from DDIT,(Investigation) Unit, drew the conclusion of escapement of income. In the case of Assistant Commissioner of Income-tax v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500 (SC), the Supreme Court had explained that expression “reason to believe” would mean justification to know or suppose thatincome had escaped assessment. While, it is correct that it is not necessary for the Assessing Officer to finally ascertain whether income had escaped assessment, nonetheless, the Assessing Officer must have sufficient cause to believe that it has.
25. In the present case, as may be seen, there is no “close nexus” or “live link” between tangible material and the reason to believe that income has escaped assessment. The information received from the Investigating Unit of the Revenue cannot be the sole basis for forming a belief that income of the assessee has escaped assessment. Having received information from the Investigating Wing, it was incumbent upon the Assessing Officer to take further steps, make further enquiries and garner further material and if such material indicate that the income of the assessee has escaped assessment and then form a belief that the income of the assessee has escaped assessment.
26. Clearly, in this case, the Assessing Officer has not acquired any material to form such belief. There is not even a line of reason which may justify the formation of the belief. Consequently, we are satisfied that reopening of assessment for the assessment year in question by the Assessing Officer does not satisfy the requirement of law in terms of Section 147 & 148 of the Act.” Unquote.
6. Hon’ble Bombay High Court in the case of Principal CIT-5 vs. Shodiman Investments (P.) Ltd. [2020] 422 ITR 337 (Bombay) has held as under :
Quote, “12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. Lakhmani Merwal Das [1976] 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the aforesaid requirement are not met, the Assessee isentitled to challenge the very act of re-opening of Assessment and assuming jurisdiction on the part of the Assessing Officer.
13. In this case, the reasons as made available to the Respondent- Assessee as produced before the Tribunal merely indicates information received from the DIT (Investigation) about a particular entity, entering into suspicious transactions. However, that material is not further linked by any reason to come to the conclusion that the Respondent-Assessee has indulged in any activity which could give rise to reason to believe on the part of the Assessing Officer that income chargeable to tax has escaped Assessment. It is for this reason that the recorded reasons even does not indicate the amount which according to the Assessing Officer, has escaped Assessment. This is an evidence of a fishing enquiry and not a reasonable belief that income chargeable to tax has escaped assessment.
14. Further, the reasons clearly shows that the Assessing Officer has not applied his mind to the information received by him from the DDIT (Inv.). The Assessing Officer has merely issued a re-opening notice on the basis of intimation regarding re-opening notice from the DDIT (Inv.) This is clearly in breach of the settled position in law that re- opening notice has to be issued by the Assessing Office on his own satisfaction and not on borrowed satisfaction.
15. Therefore, in the above facts, the view taken by the impugned order of the Tribunal cannot be found fault with. This view of the Tribunal is in accordance with the settled position in law.
16. Therefore, the question as framed does not give rise to any substantial question of law. Thus, not entertained.
17. Accordingly, Appeal dismissed.” Unquote.
7. Respectfully following the decisions of the Hon’ble High Court of Delhi and Bombay, we hereby hold that the AO was not having any specific information, before issuing notice u/s 148 of the Act. Therefore, reasons recorded are based on surmises. Accordingly, notice u/s 148 of the Act is quashed.
8. We have perused the paper book filed by the assessee it is specifically observed that the assessee has denied knowing Mr. Sachin Nahar. The assessee has filed an affidavit stating that he do not know any Mr. Sachin Nahar. The assessee also filed a police complaint. However, the AO has not brought on record any document to prove that the assessee has taken any cash loan, as alleged from some person wherein Mr. Sachin Nahar was broker. In the assessment order there is no reference to any seized document wherein any such allegation can be proved. In these facts and circumstances of the case, the addition made by the AO is without any supporting material and needs to be deleted. Accordingly, the AO is direct to delete the addition of Rs.51,35,000/-.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 06th July, 2026
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